Holiday Let Mortgages

Buying a property to rent out as a holiday let can be a worthwhile investment, but you’ll need the right kind of mortgage. In this guide, we explain what a holiday let mortgage is, the rules that apply, how much you can borrow, and how to compare the best UK lenders and rates for holiday let mortgages.

What is a holiday let mortgage?

It’s a type of home loan used to purchase a property that you intend to rent out on a short-term basis to paying guests. You’ll need a holiday let mortgage if you plan to use the property primarily as a rental investment, rather than as a second home, and not to be confused with a ‘holiday home mortgage’.

You’ll need a holiday let mortgage instead of a buy-to-let mortgage if you’re planning to rent out your property to multiple short-term guests (rather than long-term tenants). Buy-to-let mortgages often don’t permit short-term letting, and most residential mortgages prohibit renting out at all.

Eligibility criteria and rules for holiday lets

Lenders tend to have specific eligibility criteria and rules when it comes to holiday let mortgages. Here are the key areas to be aware of:

• Expected rental income: Your projected holiday let rental income must meet a minimum rental coverage ratio, which is usually 125% to 145% of the mortgage payments. Some lenders also require a minimum personal income, typically £20,000 to £40,000, to ensure you can cover costs in low seasons.

• Property location and your experience: The property should be in a desirable letting or tourist area, and some lenders avoid locations with limited demand or leasehold restrictions. A few lenders consider first-time landlords, while others prefer applicants with buy-to-let or holiday letting experience.

• Personal use limits: If you intend to use the property yourself, it must still meet the criteria to be primarily considered a commercial letting investment for the majority of the year. Personal use can be up to 90 days with some lenders, but it varies.

• Furnished letting: To qualify under Furnished Holiday Let (FHL) rules (which can lead to extra tax relief on your rental income), the property must be available for letting as a furnished holiday home for at least 210 days per year and let out for at least 105 days.

• Deposit size: You’ll typically need at least a 25% deposit, which is similar to other types of property investment mortgages. However, some lenders may request more, while others may require less if you have other assets that can be used as collateral.

• Planning permission and letting type: In some areas, specific local authority restrictions and rules apply. You may need planning consent to operate a holiday let. Also, properties must usually be let out on a short-term basis (not to family or long-term tenants).

• Ownership structure: Some lenders accept applications through limited companies, though the criteria may be tighter, and you may need specialist advice to pursue this strategy.

How to get a mortgage for a holiday let

If you’re applying for a holiday let mortgage, comparing lenders and understanding each provider’s criteria can be time-consuming and confusing. Every lender will assess the projected rental income, property location, and your personal finances differently. This means varying rates and terms, depending on your circumstances.

Speaking with a mortgage adviser who specialises in holiday let mortgages can save you both time and money, helping to maximise the amount you can borrow at the best rate. Our advisers can introduce you to the most suitable lender based on your deposit, income, holiday let goals, and the property’s expected investment potential.

If you’d like a free, no-obligation chat with a broker who specialises in holiday let mortgages, you can get started below:

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How much can you borrow?

Lenders typically calculate affordability for holiday let mortgages using a combination of the property’s income potential and your personal finances. Here are some of the main factors that influence how much a lender will let you borrow:

• Projected rental income during peak and off-peak seasons.

• Personal affordability (a minimum level of income is usually required).

• Deposit size and loan-to-value (LTV) ratio.

• Seasonal income is often estimated by multiplying the average weekly rental rate by 30 to 35 weeks.

• Some lenders work with local holiday letting agents or use an online yield calculator to estimate your expected rental income.

Use our calculator below to get a rough idea of your affordability and rental yield.

Compare the best holiday let mortgage rates

Our free mortgage comparison tool is tailored to show rates from lenders across the UK market, including those that offer holiday let mortgages. You can customise your search by deposit size, mortgage type, term length, and more.

These holiday let mortgage rates are updated daily, allowing you to view and compare the best deals available at any time. If you select a deal to find out more, one of our experienced brokers can help you arrange your mortgage and ensure it’s the best holiday let mortgage for your goals.

Whether this is your first holiday let or an addition to an existing property investment portfolio, you can compare all the best holiday let mortgage rates currently available in the UK here:

Please note that we have tailored this tool to display results from lenders who are known to offer holiday let mortgages. You can toggle it to show rates from the whole market via the 'more filters' tab in the bottom left.

Holiday let mortgage lenders

As this is a niche area, a smaller number of lenders will be available. If you want to get an idea about mainstream lenders who may be open to offering a holiday let mortgage, here are some examples of popular options:

• Cumberland Building Society: Cumberland offers holiday let mortgages in certain situations and is one of the few lenders that considers limited companies. They offer up to 75% LTV and will consider first-time holiday let investors; however, they won’t accept non-standard construction properties.

• Principality Building Society: Although Principality considers holiday let mortgages up to a 75% LTV (and first-time buyers), there are restrictions. For example, there must be at least 85 years remaining on the lease of a leasehold property, there cannot be any restrictive conditions, and you can only own two holiday lets.

• Nationwide: With Nationwide’s buy-to-let arm, The Mortgage Works, you can explore holiday let mortgages. However, these products are available only through a broker, and you must already own a primary residence.

If you want to carry out a realistic and accurate comparison of holiday let mortgage deals, it’s best to have a discussion with a specialist broker who can walk you through all the options based on your individual circumstances and investment goals.

Why choose Money Helpdesk for your holiday let mortgage?

With our free comparison tool, you can compare holiday let mortgage rates from lenders across the UK. We also offer expert guidance through specialist brokers who understand the unique criteria of the holiday let mortgage market.

Whether you're a first-time holiday let buyer or expanding your property portfolio, our experienced advisers will help you find the most suitable lender and secure the best rates, often with access to exclusive deals not advertised publicly.

Here’s why property investors and landlords across the UK trust us to help them find a holiday let mortgage:

• Easily compare current mortgage rates online for free

• Our brokers are 5-star rated on leading review sites

• Free initial chat with no obligation to proceed further

• Access to specialist holiday let mortgage lenders with exclusive deals

If you’d like to compare current rates or have a free, no-obligation chat with a broker who specialises in holiday let mortgages, you can get started here.