Apply For Holiday Let Mortgages 2024

Get a Holiday Let Mortgage Online with Lending Expert!

Key Points

• Holiday let mortgages are only for people intending to buy a property to rent out on a short-term basis to tourists as a holiday home.
• Holiday let mortgages are not the same as buy-to-let mortgages, and buy-to-let mortgages can’t be used in place of a holiday let mortgage.
• Every holiday let mortgage lender has a different criteria, but you usually need to be over 21 years old with a steady income of over £20,000 at least in order to qualify.
• Holiday let properties are taxed differently than buy-to-let properties.

What Is a Holiday Let Mortgage?

A holiday let mortgage is solely designed for people who are looking to buy a property that will be let out as a holiday home to tourists. These rentals are short-term and act as a form of business to the owner. With the holiday let mortgage loan, it can be easier to find the funds to purchase a property to be used in this way.

What Property Types Can a Holiday Let Mortgage Be Used For?

A holiday let mortgage can be used for most types of property, as long as they are being let on a short-term basis to tourists, and you don’t live there. These include, but aren’t limited to, the following:

• AirBnBs.
• Cabins.
• Cottages.
• Country Homes,Estates.
• Guesthouses.
• Lodges.

Am I Eligible for a Holiday Let Mortgage?

Each lender has their own criteria, but there’s some general things that most lenders look for before approving an applicant. Standard eligibility criteria for a holiday let mortgage includes:

• Be over 21 years of age.
• Have stable employment or self-employment with a provable income.
• The main income should not be from rentals or investments.
• Borrowers should have a minimum provable income of between £20,000 and £40,000 per year.

How Much Will a Holiday Let Mortgage Cost?

Usually, in order to get a holiday let mortgage you’ll need between a 25% and 30% deposit. That’s because there is significantly more risk to the lenders of a holiday let than with other types of mortgage. Lenders then look at whether the property will be able to provide a rental income of typically 125% to 145% of the interest payable on the mortgage.

You may need to show that you can afford the mortgage payments during periods when your property isn’t rented out.

For example, if you wanted to buy a holiday let worth £250,000 you’d need to be able to put down at least a £75,000 deposit. You would also need to be able to generate at least £11,000 a year rental income from the property, assuming a mortgage interest rate of 4.5%.

Why Do I Need a Holiday Let Mortgage?

If you’re planning on buying a property to rent out to tourists for short stays, you will need a holiday let mortgage. This is because traditional mortgages do not allow you to let out your home, and a buy-to-let mortgage may not be suitable.

By its nature, a holiday let property’s income will fluctuate. In peak months it is likely to be considerably higher than buy-to-let income, but it isn’t guaranteed for months on end. As a result, the amount a lender will loan you with a holiday let mortgage is based on an income projection figure. This is instead of a simple multiple of potential rental income.

Your income will also be considered when you are assessed for a holiday let mortgage. This is because the lender will need to know you can cover the mortgage when the property isn’t occupied. The type of property you buy will also affect your ability to get a holiday let mortgage.

Lenders want to know that the property could be easily sold if need be. As such, they won’t usually give you a mortgage on a holiday park home, or somewhere that is limited to just being used as a holiday home. As holiday let mortgages are designed specifically for the purpose of letting out a property as holiday rental, there won’t be any small print that forbids you from doing so.

Is a Holiday Let Mortgage the Same as a Buy-to-Let Mortgage?

To put it simply, no, a holiday let mortgage is not the same as a buy-to-let mortgage.

Holiday let properties allow the owner to generate far more profit than a buy-to-let property would. This is because you can generally rent these properties out for much more money due to the holiday home status and the area it is in.

A holiday let property is treated differently to a buy-to-let property in terms of tax. A holiday let is classed as a business, meaning that you are still able to claim tax relief on mortgage interest.

What Makes a Holiday Let Different to a Buy-to-Let?

For your property to count as a holiday let, as opposed to a buy-to-let, it must be available for letting as a furnished holiday accommodation for at least 210 days per year. These rules do not apply for a buy-to-let property, but they still leave 22 weeks of the year free for you to make the most of your holiday home.

How Is Lending Expert Different for Holiday Let Mortgages?

Lending Expert works with several high street banks and specialist direct lenders to give you the best deal possible. We have access to over 1,000 mortgage deals and have the expertise to help you get approved with the best rates possible.

Lending Expert was founded in 2013, so we have accumulated masses of experience in the secured loan and mortgage market. We’ve helped thousands of customers to date, and would love to help you secure the best rates on a mortgage or loan.

Use our free online eligibility checker with no obligation to see if you’ll be approved for a holiday let mortgage!