Thinking About Buying a Holiday Let Property?
You’re in the right place! Whether you’re new to property investment or a seasoned landlord, we’re here to walk you through the world of holiday let mortgages. Learn everything you need to know — from how these mortgages work to how they compare with standard buy-to-let options — and let Reliance Mortgages help you make an informed and confident investment decision.
What Is a Holiday Let Mortgage?
A holiday let mortgage — sometimes called an Airbnb mortgage — is a specialist type of buy-to-let mortgage designed for properties you intend to rent out on a short-term basis. These mortgages are tailored to landlords who want to list properties on platforms like Airbnb, Vrbo, or Booking.com, rather than renting to long-term tenants.
Unlike standard buy-to-let mortgages, holiday let mortgages consider your projected rental income from short stays, and they come with different requirements around property use, income, and licensing.
How to Buy a Holiday Let Property
Here’s a step-by-step overview of the process:
- Research & Planning: Look into popular holiday destinations with high short-term rental demand. Consider proximity to attractions, transport links, local amenities, seasonal trends, and the average rental price per night.
- Financing Options: Once you understand the local rental market and property values, Reliance Mortgages will compare the market to find the most competitive rates and terms based on your specific investment goals.
- Property Search: Use local estate agents or property portals to find properties that align with your budget and appeal to holidaymakers.
- Property Evaluation: Assess the property’s condition, location, and income potential. Take into account occupancy rates, legal compliance, and any renovation or furnishing needs.
- Mortgage Application: Gather documents such as income proof and bank statements. Reliance Mortgages will handle the application and guide you through the process right through to completion.
- Legal Support: A solicitor or conveyancer will manage contracts, searches, and title transfers to ensure a smooth transaction.
- Insurance & Management: Holiday let insurance is essential. You can manage the property yourself or use a management company for bookings, cleaning, and guest communications.
- Marketing & Bookings: Create appealing listings on major platforms and promote your property through social media and other channels to boost occupancy.
Holiday Let vs. Standard Buy-to-Let
Holiday lets can offer higher rental yields and personal usage flexibility, but they usually require more active management and may be affected by seasonal demand.
Buy-to-let investments typically offer consistent rental income from long-term tenants and require less hands-on management. However, changes to tax rules mean landlords may no longer deduct all mortgage interest as they can with holiday lets. Always consult a qualified accountant to assess your situation.
Holiday Let Mortgage Criteria
Lenders will usually assess the following when reviewing your application for a holiday let mortgage:
- Minimum property value
- Maximum Loan-to-Value (LTV) ratio — usually up to 75%
- Projected annual rental income
- Experience as a landlord or property owner (though not always required)
To calculate rental income potential, lenders typically average projected income across low, mid, and high seasons, and then assume a 70% annual occupancy rate (roughly 30 weeks per year). They often require that this figure covers 145% of the monthly interest payments.
How Much Deposit Will I Need?
Holiday let mortgages usually require a higher deposit than standard mortgages. Most lenders ask for a deposit of 25% to 30% of the property value. Your actual deposit will depend on your financial circumstances and projected rental income.
Holiday Let Mortgage Rates
Interest rates on holiday let mortgages are typically higher than those for residential or traditional buy-to-let mortgages due to the perceived risks of short-term letting.
However, these higher rates may be offset by greater rental yields. It’s crucial to factor in current market conditions, occupancy projections, and profitability before choosing a mortgage product.
Holiday Let Regulations
Before entering the holiday rental market, be sure to check local authority rules. These may include:
- Registration requirements
- Health and safety compliance
- Council tax or business rates
- Licensing and planning restrictions
Complying with these rules helps you operate legally and avoids costly penalties down the line.
Is a Holiday Let Right for You?
Holiday lets can offer a rewarding mix of financial gain and personal enjoyment. With the right location, property, and financing, you can create a high-performing investment that offers strong returns and a lifestyle asset.
With expert support from Reliance Mortgages, you'll be guided through every step — from mortgage approval to property acquisition. Let us help you make your dream of owning a holiday rental a reality.
Book Your Free Consultation Today
Book Now