Our best holiday let mortgages

Holiday let deposits currently need to be at least 20% of the property value. This means the maximum loan to value (LTV) for a holiday let is 80%. Mortgage interest rates are typically lower if you put down a larger deposit, of between 25-40% of the property value.

At present, holiday let mortgage rates are typically higher than standard buy to let rates, which would make like for like borrowing more expensive. However, don’t assume that this puts a holiday let mortgage out of financial reach. Rental income from holiday lets is typically significantly higher than from a standard buy to let, meaning yields are very favourable.

The loan size you can get with a holiday let mortgage will depend on the rental income it receives or is expected to generate. Mortgage lenders will look at an average of high, medium, and low season weekly income throughout the year and offer a loan amount related to this and their maximum loan to value rules. The maximum loan to value for a holiday let mortgage is currently 80%. So, you can borrow up to 80% of the property value and will need at least a 20% deposit.

You cannot get a holiday let mortgage on a holiday lodges. Holiday lodges, timber lodges, caravans or mobile homes are, in essence, temporary structures that can be removed from their location and you typically don’t own the land they sit on when you buy one. Given the property could be transported away, any loan using the property as security, is at significant risk. This is why the lenders we work with will not accept temporary structures as the security for a holiday let - or other - mortgage.

A residential mortgage is designed for properties where the owner occupies the property. If you decide to move out of your home on a temporary basis and to rent it out, you could ask your lender for a consent to let. If you intend to permanently let out your entire house as an AirBnB rather than live in it, then remortgaging on to a holiday let product is a better option.

Holiday let mortgages are not regulated by the FCA (Financial Conduct Authority). A holiday let mortgage is a type of buy to let mortgage. Buy to let mortgages are generally not FCA regulated, because they are seen to be products taken out by businesses, not by consumers.

You may be able to get a holiday let mortgage as a first time buyer. If you are the only applicant on the mortgage and are a first time buyer, there are fewer options. However, you could also consider making a joint application with someone you trust, who has owned property before. This can widen your options. We can help you, no matter which path you choose.

No, a holiday let property does not require a commercial mortgage. Holiday let properties can be financed with a holiday let mortgage. A commercial mortgage is for a property that a business or multiple businesses operate from. Similarly, you can take out a holiday let mortgage through a limited company, this still does not require a commercial mortgage.

You can change a buy to let property into a holiday let, but if your property is mortgaged, you will need to switch from a standard buy to let mortgage to a holiday let mortgage. It is not uncommon for landlords to change their investment strategy and choose to rent a former long-term let on a short-term holiday let basis.However, the dynamic changes and so a different type of mortgage is required. It is straightforward to make the change - just like any remortgage process.

You only pay council tax on a holiday let property if it does not qualify for holiday let business rates. To qualify for business rates a property in England needs to be available to let for a total of 140 nights per year and actually let for at least 70 nights in the previous 12 months. A property in Wales needs to be available to let for a total of 252 nights per year and actually let for at least 182 nights in the previous 12 months.

No, it is not particularly hard to get a holiday let mortgage. A specialist mortgage broker such as Commercial Trust can help you find a suitable product from a wide choice. Whilst holiday let mortgages are a more specialist type of borrowing, which means there are fewer lenders than for residential mortgages, there is still plenty of lenders offering them. First time landlords can secure a holiday let mortgage, but if you own your own home this presents more lender options.

It can be very worthwhile owning a holiday let as they can attract high yields. There is a greater level of administration because you have a regular turnover of tenants. This can be outsourced, but you would need to factor the costs of that into your profit and loss. Initial costs are likely to be higher, as holiday lets must be fully furnished prior to renting and to stand out against other holiday lets, you might invest in special extra touches and quality of décor and furnishings. However, holiday lets can be significantly more profitable than standard buy to let properties, and can make holiday lets a very lucrative investment.

A residential mortgage is not suitable if you are permanently letting out your property on a short-term/holiday let basis, so a holiday let mortgage is the ideal way to secure borrowing.

You will need a specialist holiday let mortgage, if you are buying an AirBnB property. There are a number of providers who will offer AirBnB mortgage lending, but each lender has different criteria, so the easiest way to find out which lender is suited to your needs is to speak to a specialist broker like Commercial Trust.