Extra Costs of a holiday home mortgage

If you are looking for holiday home mortgages , you know it can seem like a long and stressful process. When at last you find the right mortgage and your dream holiday home finally seems within your grasp, there is a huge sense of relief. So it’s easy to forget that there are other costs involved. But if you don’t budget for all these extra costs, you could be in for problems.

• Stamp duty. Stamp duty starts at £125,000. You will be very fortunate to find a holiday home for less than this, so you will have to budget for at least 1 per cent of your purchase price.
• Survey fees. The lender will probably arrange the survey for you and will add the fee to your mortgage. If you are arranging it yourself, shop around for a good deal, as fees do vary. Even if the lender arranges it, you are very strongly advised to arrange your own as well, especially if it’s an old or unusual property.
• Legal fees. Some people try to dispense with a solicitor and do it all themselves. But this is very unwise, especially for a holiday home mortgage. You may well have fallen in love with the property because it’s very old, or very isolated, and there could be all sorts of legal complications you don’t know about. Whether you use a solicitor or not, you will still need to pay land registry fees and local authority search fees.
• Mortgage indemnity guarantee. This will be added to your holiday home mortgage if you are borrowing more than 75 per cent of the purchase price. It could be anything from a few hundred pounds to a few thousand pounds.
• Insurance. You will very likely have to arrange for life assurance cover to go with your holiday home mortgage, and in addition the lender will almost certainly require you to have buildings insurance, either with them or with your own insurer. Both of these are extra costs. And of course you would be most unwise not to take out a household contents policy, which is likely to be more expensive than the one on your main home.

These are all the unavoidable costs that go with your holiday home mortgage. Of course, you will also need to furnish and equip your holiday home, but this can be done at your own pace.

It’s essential that you budget for all these additional costs at the outset when you are arranging your holiday home mortgage. Otherwise, at best they could come as a nasty shock, and at worst they could cause the whole transaction to collapse.

Sean Horton is a Director of Holiday Let Mortgages who offer expert advice for Holiday Home Mortgages