Its new Base Rate Tracker and Fixed Rate products offer interest rates as low as 5.39 per cent and applicants’ eligibility will be judged according to their property’s potential rental income, rather than their personal income.
The aim of this new offering is to give potential investors an easier route towards owning a holiday home, which would tend to be excluded from standard buy-to-let mortgage schemes.
Anyone wanting to take out one of the new loans – launched today – will need to put down a deposit of 25 per cent. However, so long as they earn more than £25,000 per year in regular employment and can prove their intended purchase has the potential to generate annual rent worth at least 150 per cent of the mortgage repayments, they should qualify. Should the anticipated rental income fall short, the Society will take account of the applicant’s personal income.
Other features of the new holiday buy-to-let offer include:
- Availability through branches, Scarborough Direct and intermediaries
- Availability for both purchase and re-mortgage
- Flexibility – allowing capital repayments, underpayments and payment holidays
-Both products are available to both new and existing customers.
Tony Burdin, head of retail strategy, said: ‘Buying property to let has become increasingly popular in recent years. Low interest rates have made mortgages more affordable, and rental income has been seen as an attractive alternative investment to bolster pension provisions.
"Holiday lets are no exception to this and, with the additional benefit of the valuable tax advantages holiday lets provide over buy-to-let properties, these new mortgages offer an exciting proposition for would-be landlords.
‘We believe these products are the first ever self-funding mortgages in the UK specifically for holiday homes. This is a welcome development for people who may not have sufficient personal income to support significant loans on both their main and second homes.
"Given our headquarters’ location in Scarborough, one of the UK’s coastal tourism hotspots, it seems apt that we should lead the way by offering a mortgage of this kind.’
Sean Murphy, Scarborough’s mortgage product manager, added: ‘Holiday Lets offer significant relief on capital gains tax upon the sale of a property, providing it has been owned for two years. What’s more, holiday lettings are recognised by the Inland Revenue as a business, generating earned income, for pension purposes. This differs from other forms of property letting which are classed as investment income.
‘With most lenders yet to enter this market, we would urge anyone thinking of putting some of their long term savings into a second home to give us a call and find out more about what we believe is an unprecedented opportunity. Our skilled advisers will be happy to help them explore the possibilities."
