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If you’ve ever dreamed of owning a second home in your favourite UK holiday spot, a holiday let mortgage could help achieve it. We explain how holiday let mortgages work, the tax implications and how much they cost.
KEY INFORMATION
Holiday let mortgages let you borrow money to buy a property that you’ll let out to tourists on a short-term basis. These mortgages are designed for fluctuating rental income and have different rules to standard Buy to Let mortgages.
Holiday let mortgage lenders require deposits of least 25%, which is higher than standard residential mortgages, which are widely available with a 5% deposit. Plus, there’s other lending criteria you’ll need to meet too.
Use fee-free mortgage brokers L&C to help you find the right holiday let mortgage
| Pro | Cons |
|---|---|
| High potential rental income – especially in peak season. | Higher property prices – properties in tourist hotspots usually cost more. |
| Tax benefits – if your property qualifies as a furnished holiday let. | Stamp duty surcharge – You’ll pay more stamp duty if buying a holiday let means you’ll own two properties. |
| You’ll have a holiday home you can enjoy which can cut holiday costs. | Higher mortgage rates – usually apply to holiday let mortgages compared to residential mortgages. |
| Strong demand UK, especially in popular areas. | Ongoing responsibility and running costs. |
Read more about the pros and cons in our guide Buying a Holiday Home UK.
“Holiday let mortgages are aimed at those investing in a property that they intend to let to holiday makers. This may sound very similar to Buy to Let but is a more specialist area. The lender will still want to assess the rental income to be sure that it will be enough to cover the mortgage and this will decide what level of borrowing is available. However, holiday lets differ from a standard BTL that is let on a regular tenancy arrangement and will often have greater fluctuation in the expected income.
“It will typically be a series of short term lets which can generate higher income but carries a greater risk of void periods. For example, a seaside holiday let may command higher demand and rental during the summer but see the level of bookings drop in the winter. Holiday let mortgages will therefore be designed to help cater to investors focused on the purchase of a property aimed at the holiday let sector.“
Eligibility criteria varies by lender but for most holiday let mortgages you’ll typically need:
Speak to fee-free mortgage brokers L&C to help you find the best holiday let mortgage
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
You can typically borrow up to 75% of a property’s value on a buy to holiday let mortgage.
However, when calculating how much to offer you, lenders will also assess the holiday let’s projected rental income, your personal income and other affordability factors.
Here’s the maximum you can usually borrow on a holiday let mortgage, by deposit size:
| Deposit size | Maximum holiday let mortgage | Maximum Property price |
|---|---|---|
| £50,000 | £150,000 | £200,000 |
| £100,000 | £300,000 | £400,000 |
| £150,000 | £450,000 | £600,000 |
Holiday let mortgage monthly costs depend on the amount you’re borrowing, the interest rate and the term. See instantly how much you would pay on a mortgage, you can use a holiday let mortgage calculator.
Here’s the step-by-step process of how to apply for a holiday let mortgage:
Speak to award-winning fee-free mortgage brokers L&C to help you find the right holiday let mortgage
Holiday let mortgage lenders include:
However, while having an overview of which lenders offer holiday let mortgages is useful, the quickest way to find the right mortgage for you and boost your chances of a successful application, is to use an expert holiday let mortgage broker. They’ll know the market inside out and may be able to access specialist mortgages that you can’t find on the open market.
Holiday let mortgage rates are usually slightly higher than standard residential mortgage rates due to the higher risk for the lender.
The best holiday let mortgage rates you can access will depend on factors including:
However, the best buy to holiday let mortgage rates change frequently so the best way to find information on the latest rates is by speaking to an expert holiday let mortgage broker.
Use fee-free mortgage brokers L&C to help you find the right holiday let mortgage.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
With Buy to Let, you let out the property on a long-term basis to tenants. This means that as long as you can find tenants, you’ll receive long-term rental income.
By comparison, with a holiday let you let the property out to holidaymakers on a short-term basis. You may be able to earn higher rental rates but this usually fluctuates throughout the year.
| Type of rental | Buy to Let | Holiday Let |
| Income potential | You’ll usually get less per week/ month than with a holiday let but when the property is let your income will be regular. | You may achieve a higher rate per week/ month. But bookings may be seasonal and you may earn less over the course of the year. |
| How much management will it need? | Once your tenants are in place, you’ll usually only need to get involved if there are problems to resolve. You may get an estate agency to handle this for you but you’ll pay for this service. | The property will need to be cleaned in between lets and other upkeep will need to be done such as gardening. You may get a holiday let company to do this for you but you’ll pay for this. |
For expert advice on holiday let mortgages, speak to fee-free mortgage brokers L&C
You could look at alternative ways to finance a holiday let.
If you’re buying a property that will only be used by you and your family, you’ll need a holiday home mortgage. Holiday home mortgage rates may be better than with holiday let mortgages.
However, lenders often have limits on the maximum loan-to-value they will offer on a second property where there’s already another mortgaged home. Plus, affordability will need to be met so the borrower’s income will need to cover both mortgages and other outgoings.
If you’re considering letting out your holiday home for periods, you must be up front about this from the outset.
L&C’s David Hollingworth explains: “If the plan is to let it as well then it will be important to flag that intention. Like a main residence, many lenders will not ordinarily want a residential second home to be let out but some may give some leeway to allow for more occasional lets for a certain period of time each year.
Read more in our guide Buying a Holiday Home UK
Speak to award-winning fee-free mortgage brokers L&C to help you find the right holiday let mortgage
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
If you’re buying a holiday let you’ll also need to consider tax:
The tax rules around furnished holiday lets changed from 6 April 2025, aligning them more closely with those applied to Buy to Let properties.
Find more information on holiday let tax on the government website. But for tailored advice, speak to an independent financial adviser.
When you buy an additional residential property worth more than £40,000 you’ll usually have to pay the additional stamp duty for second homes rate, whether you’re buying a second home as an investment Buy to Let, for a holiday home or any other purpose. Read more in our guide Stamp duty for second homes explained.
You may be able to avoid paying second home council tax on your holiday let and pay business rates instead but there is criteria you’ll need to meet. Find out more in our guide Second home council tax explained.
Need investment advice on a holiday let? Find an independent financial adviser here
You don’t have to make life’s big financial decisions alone. Get the right IFA for you today with our partners at Unbiased.
There are different considerations when buying a holiday let compared to buying a home to live in. Here are some steps to take:
This depends on the type of mortgage you have and your lender. Find out more in our guide Renting out your home as a holiday let.
You’ll usually need at least a 25% deposit to get a holiday let mortgage but by putting down a larger deposit you’ll get access to more mortgage deals. For more on mortgages, read our guide Mortgages made simple.
Yes. With Buy to Let mortgages, the lender will determine an annual rental figure based on the monthly rent. But holiday let income will fluctuate, so the amount a lender will loan you with a holiday let mortgage is based on an income projection instead of a simple multiple of potential rental income.
If you are buying a property to rent it out as a holiday let, you’ll usually need a holiday let mortgage. This is different to a Buy to Let mortgage, which are designed for properties that will be let out to tenants.
Yes. If you need to borrow money to buy your holiday home, you will need a specialist mortgage for a holiday let. Traditional residential mortgages do not usually allow you to let out your home and a Buy to Let mortgage may not be suitable.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ, authorised and regulated by the Financial Conduct Authority (FRN: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of LifeSearch Limited, an Appointed Representative of LifeSearch Partners Ltd, authorised and regulated by the Financial Conduct Authority. (FRN: 656479).
Independent Financial Adviser service is provided by Unbiased, who match you to a fully regulated, independent financial adviser, with no charge to you for the referral.
Bridging Loan and specialist lending service provided by Chartwell Funding Limited, registered office 5 Badminton Court, Station Road, Yate, Bristol, BS37 5HZ, authorised and regulated by the Financial Conduct Authority (FRN: 458223). Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.
