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If you’ve ever dreamed of owning a second home in your favourite UK holiday spot, could a holiday let mortgage help you 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 typically require deposits of at least 25%, which is higher than standard residential mortgages, which are widely available with a 5% deposit. Plus, there are other lending criteria you’ll need to meet too.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
Here are some of the pros and cons of buying a holiday let:
| Pro | Cons |
|---|---|
| High potential rental income – especially in peak season and in popular areas. | 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 in the UK, especially in popular areas. | Ongoing responsibility and running costs. |
You can read more about the pros and cons in our guide Buying a Holiday Home UK.
Whether buying a holiday let is right for you will depend on your circumstances. So it’s a good idea to investigate your holiday let mortgage options early in the process. We also strongly advise taking professional financial advice before buying a holiday let property.
Our Mortgage Expert Sarah Tucker says: “Holiday let mortgages can work brilliantly for the right borrower, but going into the process with realistic expectations and a clear long-term strategy is incredibly important.“
“Holiday let mortgages are assessed differently to standard residential mortgages, with lenders often looking closely at projected rental income and expected occupancy levels when determining affordability. There are also additional costs to factor in, such as furnishing, maintenance, insurance and ongoing management of the property.
“A good mortgage adviser can help buyers understand the wider financial picture, stress test affordability and make sure the investment remains manageable during quieter periods as well as busy seasons.”
Eligibility criteria varies by lender but for most holiday let mortgages you’ll typically need:
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
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. To 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:
Get fee-free holiday let mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Holiday let mortgage lenders include:
However, while it may be useful to have an idea of some of the lenders that offer holiday let mortgages, when it comes to finding the best mortgage lender for you, it’s a good idea to speak to a mortgage broker. They’ll know different lenders’ criteria and will be able to find the right mortgage for you.
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:
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
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. |
Get fee-free holiday let mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
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.
You’ll need to meet the lender’s criteria 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 with the lender about this from the outset. Read more in our guide Buying a Holiday Home UK
Get fee-free holiday home mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
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 may get access to more mortgage deals and at better rates. For more on mortgages, read our guide Mortgages made simple and for personalised advice, speak to the award-winning expert advisers at Mortgage Advice Bureau.
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.
If you need to borrow money to buy a holiday home you plan to let out, you will usually need a specialist mortgage for a holiday let.
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 Mortgage Advice Bureau Mortgages (Mortgage Advice Bureau), 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. If you complete on a mortgage through Mortgage Advice Bureau, Mortgage Advice Bureau will be paid a commission by the chosen lender. Mortgage Advice Bureau will share a percentage of this commission with HomeOwners Alliance, the referring third party. The commission Mortgage Advice Bureau receives doesn’t affect the product or rate recommended to you.
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.
