Holiday Let Mortgages

A holiday let mortgage is a mortgage designed for a property that will be offered to paying guests as short-term holiday accommodation.

The property might be marketed through:

• A holiday letting agent
• Your own website
• An online booking platform
• A local property-management company
• A specialist holiday accommodation provider

Guests normally stay for several nights or weeks rather than occupying the property as their main home.

A standard residential mortgage will not normally permit a property to be operated as a commercial holiday let. An ordinary buy-to-let mortgage may also prohibit short-term or holiday accommodation.

You must therefore obtain a mortgage that specifically allows the intended use.

A holiday let mortgage is secured against the property. You are responsible for making the mortgage payments whether or not the property is occupied by guests.

The lender will assess whether the expected holiday rental income is sufficient to support the borrowing. It may request a rental projection from an experienced holiday letting agent rather than relying on a standard monthly residential rent.

The lender may also consider:

• Your personal income
• Your credit history
• Your existing financial commitments
• The deposit
• The property’s value
• The location
• The expected occupancy
• Seasonal changes in demand
• Your experience as a landlord
• How the property will be managed
• Whether you intend to use it personally

If the mortgage is approved, the lender registers a legal charge against the property. You must then make the agreed monthly payments throughout the mortgage term.

A standard buy-to-let property is generally rented to a residential tenant under a longer-term tenancy.

A holiday let is occupied by a series of short-term guests. This creates a different pattern of income, costs and management.

Important differences can include:

• The length of each stay
• The number of occupants during the year
• Seasonal rental income
• The cost of cleaning and managing bookings
• Furniture and equipment requirements
• Marketing costs
• Local planning restrictions
• Insurance requirements
• The lender’s rental calculation
• The potential for personal use

A standard buy-to-let lender may assess the property using its expected monthly rent under a residential tenancy. A holiday let lender may instead consider projected weekly rates and expected annual occupancy.

Using a standard buy-to-let mortgage for holiday accommodation without the lender’s permission could breach the mortgage conditions.

Holiday let mortgage criteria vary significantly between lenders.

MortgageKey can review:

• The property you want to purchase or remortgage
• Its location and suitability
• The purchase price or estimated value
• Expected seasonal rental income
• Your deposit and its source
• Your personal income
• Your credit history
• Your experience as a landlord
• Proposed personal use
• Your management arrangements
• Personal or limited company ownership

We can then search for lenders whose holiday let criteria may fit your circumstances and explain the interest rates, fees, deposit requirements and information needed.

All mortgages are subject to status, valuation, eligibility and the lender’s criteria.