Holiday Let Mortgages

Obtaining a holiday let mortgage can be more challenging than securing a standard mortgage due to the perceived higher risk involved.

This often results in slightly higher interest rates and more thorough affordability assessments.

You should consult local planning authorities before converting a residential property into a holiday let, as planning permission for a ‘material change of use’ could be required.

For the property to qualify as a furnished holiday let on Airbnb, it must meet the following criteria:

• Be open for bookings on Airbnb for a minimum of 210 days annually.
• Be rented out to guests for at least 105 days in a year, or
• Be adequately furnished for normal occupancy.

Traditional buy-to-let mortgages usually require tenants to be on assured shorthold tenancies (AST), which doesn’t suit short-term holiday lets. Similarly, residential mortgages may prohibit letting the property altogether.

Lenders typically have a minimum income requirement to evidence that the applicant can cover any letting void periods. An example of a minimum income requirement would be £25,000.

Lenders assess your ability to repay a holiday let mortgage based on the rental income, expecting it to be a minimum of 145% of the mortgage payments at a 5.5% interest rate.

Proof of rental income projections from a reputable holiday letting agent is often required if you are buying a holiday let.  Consult with a reputable holiday letting agent for a realistic rental projection.

If the property is already being used as a holiday let without any physical changes planned, then no planning permission is needed. However, converting or building new structures for holiday letting purposes may require permission, depending on local regulations and any existing conditions tied to the property.

Eligibility for a holiday let mortgage typically requires a 25% deposit, a minimum annual income (besides rental income), and sufficient rental income to cover the mortgage payments by a certain margin.

Interest rates are higher due to the fluctuating nature of holiday rental income.

The ability to host on Airbnb depends on your mortgage terms. While some lenders restrict this, others offer holiday let mortgages suitable for Airbnb hosting. Always check your mortgage agreement or consult with your lender/broker.

This would depend on the mortgage conditions and the mortgage lender. Some lenders allow you  to use your holiday let for personal vacations, while others do not.