Holiday Let Mortgages

Specialist mortgage finance for holiday let properties

Buying a property as a holiday let can provide an opportunity to generate rental income while potentially giving you access to a property you can use yourself.

However, holiday let mortgages are different from standard residential mortgages and traditional buy-to-let finance.

Lenders can have specific requirements around the property, expected rental income, occupancy, location and how the property will be operated.

At Cambs Ely Mortgages, we help property investors explore suitable holiday let mortgage options, whether you're purchasing your first holiday let, expanding an existing portfolio or refinancing an existing property.

We work with a wide range of lenders and can help you understand which options may be appropriate for your circumstances.

What Is a Holiday Let Mortgage?

A holiday let mortgage is specialist property finance designed for a property that is intended to be let to short-term or holiday guests rather than occupied by one tenant under a standard long-term tenancy.

Holiday lets can include:

  • Holiday cottages

  • Coastal properties

  • Country cottages

  • Apartments

  • Lodges

  • Tourist accommodation

  • Properties in popular UK holiday destinations

The property may be used for short-term guest accommodation throughout the year, with the owner potentially using it for personal stays when permitted by the lender and property arrangements.

The exact criteria vary considerably between lenders.

How Is a Holiday Let Different From Buy-to-Let?

The biggest difference is how the property generates income.

A standard buy-to-let property is usually let to a tenant under a longer-term tenancy.

A holiday let may have multiple bookings throughout the year, with different nightly or weekly rates depending on demand.

For example, a holiday property could potentially generate:

£1,000 per week during peak periods

but significantly less during quieter periods.

A lender therefore needs to consider the property's projected annual income, rather than simply applying a standard monthly rental calculation.

How Is Holiday Let Rental Income Assessed?

Rental income is a particularly important part of holiday let mortgage applications.

Lenders may consider the expected annual rental income from the property and how that compares with the proposed mortgage borrowing.

They may assess information such as:

  • Location

  • Property type

  • Number of bedrooms

  • Local tourism demand

  • Expected occupancy

  • Peak and off-peak rates

  • Existing booking history

  • Valuer's rental assessment

  • Local comparable properties

Different lenders can use different calculations.

This means the same holiday property could potentially produce different borrowing figures depending on the lender.

Do I Need Holiday Let Experience?

Not necessarily.

Some lenders may consider applicants purchasing their first holiday let, while others may have experience requirements.

Your wider financial circumstances can also be relevant.

For example, the lender may consider:

  • Your personal income

  • Existing mortgages

  • Other properties you own

  • Previous landlord experience

  • Credit history

  • Deposit

  • Proposed rental income

  • Overall investment strategy

If you're new to holiday lets, it can be particularly useful to understand the lender's requirements before committing to a purchase.

Can I Use the Property Myself?

Potentially, depending on the mortgage and lender's terms.

Some holiday let mortgages allow the owner to use the property for personal holidays or stays, subject to specific conditions.

However, you should never assume that personal use is automatically permitted.

The lender's mortgage conditions and the property's individual arrangements need to be checked carefully.

If personal use is an important part of your plans, make sure this is discussed before selecting the mortgage.

Can I Buy a Holiday Let Through a Limited Company?

Potentially.

Some lenders offer holiday let mortgages to limited companies, although criteria can be more restrictive than for standard buy-to-let.

The lender may consider:

  • Company structure

  • Directors

  • Shareholders

  • Personal guarantees

  • Property type

  • Expected rental income

  • Applicant experience

  • Existing property portfolio

If you're already building a property portfolio through a limited company, specialist advice can help establish which lenders may consider the proposed holiday let.

How Much Deposit Do I Need?

There is no universal deposit requirement for holiday let mortgages.

The amount you need can depend on:

  • Property value

  • Expected rental income

  • Location

  • Property type

  • Borrower circumstances

  • Lender criteria

  • Whether the application is personal or through a company

A larger deposit can potentially provide access to a wider range of mortgage options, but the lender will consider the complete application rather than the deposit alone.

Where Can I Buy a Holiday Let?

Holiday let mortgages can potentially be used for properties in many parts of the UK.

However, location is important.

A lender may assess the property's local demand and its ability to generate sustainable holiday rental income.

Popular tourist destinations can have strong demand, but they can also experience significant seasonal variations.

Before purchasing, it is important to consider:

  • Local tourism

  • Occupancy levels

  • Seasonal demand

  • Competition

  • Average nightly rates

  • Running costs

  • Local restrictions

  • Management arrangements

A property that looks attractive as a holiday home isn't necessarily a strong holiday-let investment.

What About Planning and Local Restrictions?

The intended use of a property needs to be considered carefully.

Planning requirements, local authority rules and restrictions can vary depending on the property and location.

Some areas have introduced or proposed measures affecting short-term holiday accommodation, so it is important to establish whether the property can legally and practically be operated as intended.

You should obtain appropriate planning, legal and tax advice before committing to a purchase.

What Costs Should I Consider?

The mortgage is only one part of the overall cost of running a holiday let.

You may also need to consider:

  • Mortgage interest

  • Property insurance

  • Utilities

  • Council tax or business rates, depending on circumstances

  • Cleaning

  • Maintenance

  • Repairs

  • Management fees

  • Booking platform charges

  • Furnishing

  • Replacement of furniture and appliances

  • Licensing or compliance costs where applicable

These costs can have a significant effect on the property's actual profitability.

It's therefore important to assess the net investment position, rather than simply looking at the potential gross rental income.

Can I Remortgage a Holiday Let?

Yes, subject to lender criteria.

You may consider refinancing to:

  • Obtain a new mortgage deal

  • Raise capital

  • Release equity

  • Fund improvements

  • Purchase another investment property

  • Restructure existing borrowing

The lender will normally consider the property, expected or actual rental income and your wider financial position.

If the property has been operating successfully, existing booking and income information may also help demonstrate its performance.

Why Use a Specialist Holiday Let Mortgage Advisor?

Holiday let lending can be more complicated than standard buy-to-let.

Lenders can have different approaches to:

  • Rental income

  • Seasonal properties

  • Personal use

  • Property location

  • Property types

  • Limited companies

  • First-time landlords

  • Existing portfolios

  • Maximum LTV

At Cambs Ely Mortgages, we can look at the complete picture and help you understand which lenders may be appropriate for your circumstances.

We can help with holiday let purchases and refinancing, including applications involving limited companies and existing property portfolios.

Considering Your First Holiday Let?

Buying a holiday let is a significant financial commitment, so understanding the mortgage position before making an offer can be extremely useful.

You need to consider not only whether you can secure the mortgage, but whether the projected income and running costs make sense for your investment strategy.

At Cambs Ely Mortgages, we provide holiday let and buy-to-let mortgage advice to landlords and property investors across Ely, Cambridge, Cambridgeshire and throughout England.

Whether you're looking for a holiday cottage, apartment or another type of short-term rental property, we can help you explore the finance options available.

Building Blocks for a Brighter Future.

Get in touch to discuss your plans.

Important Information

Holiday let mortgages are not generally regulated by the Financial Conduct Authority unless specific regulatory conditions apply. The regulatory treatment depends on the circumstances and purpose of the borrowing.

Tax treatment for holiday lets can vary according to individual circumstances and legislation. You should obtain appropriate independent tax advice before making an investment decision.

Planning rules, local authority requirements and restrictions relating to short-term lets can vary. Appropriate legal and planning advice should be obtained.

Property values can fall as well as rise.

Your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.

Mortgage availability, rates and lender criteria vary and are subject to underwriting. There is no guarantee that a particular mortgage will be available.

Information correct at the time of writing. Mortgage criteria, tax rules, planning requirements, rates and lender availability can change.