Holiday Let Mortgages - How They Work & Who Provides Them
Over the years we have been regularly asked for the best providers of holiday let mortgages by short-term rental property investors.
In truth, we only knew of one or two, so we've recently began compiling information that would be useful to any budding or established holiday rental manager.
Please note that all information provided below is for guiding purposes only and may be subject to change at any time. We are not mortgage brokers and all data must be checked with each individual lender.
Holiday Let Mortgages v Buy to Let Mortgages
Mortgages for holiday lets and short-term rentals are not to be confused with more traditional buy-to-let (BTL) mortgages.
BTL Mortgages require a property to be rented on Assured Shorthold Tenancy Agreements of 6 months to 3 years - significantly longer than short-term holiday rental stays.
Holiday Let mortgages are still quite niche
Banks do not typically offer loans for holiday homes. Building Societies and private financial firms are usually the first port-of-call.
Loans are often discounted for the first few years before returning to a higher standard variable rate.
Is there a minimum loans amount for a holiday let mortgage?
Usually. Minimum loan amounts vary with every provider however these usually start from £40-50,000.
What are the main criteria when applying for holiday rental mortgage?
Here are some typical criteria that holiday let mortgage providers will ask for.
- A larger deposit is usually required - 25%+
- Minimum income may apply per applicant(s)
- Minimum age may apply
- Usually only 1 mortgage loan per property
- May not be available for first time buyers
- May only be available for UK or EU applicants
- May require occupation of primary residence
- May exclude certain areas
Which lenders offer holiday let mortgages?
Over the last few months, we have contacted several financial institutions about how they can help prospective holiday rental managers.
Here are some of the leading providers of mortgages for UK holiday lets and short-term rental properties.
Featured Lenders
| Provider | Initial Rate | SVR | Max LTV | APRC | Min Property Value | Min Loan | Max Loan | Fees | ERC |
|---|---|---|---|---|---|---|---|---|---|
| Swansea Building Society | 5.25% | 5.25% | 70% | 5.40% | £75,000 | £50,000 | £500,000 | Application Fee £250 Arrangement Fee 1.5% | 1% (First 3 yrs) |
| Newbury Building Society | 3.45% (3 yrs) | 4.45% | 75% | 4.40% | £125,000 | £50,000 | £500,000 | Application Fee £1,500 | 2% of original loan |
SVR: Standard Variable Rate
Max LTV: Maximum Loan to Value
APRC: Annual Percentage Rate of Change
ERC: Early Repayment Charge
The Newbury Building Society is an independent, mutual society that has been serving the community for over 160 years, providing mortgages and savings for its members.
Call an Advisor: 01635 555 777
The Newbury Building Society Holiday Let Mortgage
Initial Rate: 3.45% variable (3 Years)
SVR: 4.45%
LTV: 75% up to £300,000, 60% up to £500,000
APRC: 4.40%
Minimum Property Value: £125,000
Maximum Property Value: £500,000
Terms: 5-35 years
Application Fee: £1,500
Early repayment charge (ERC): 2% of original loan
Mortgage Exit Administration Fee (MEAF): £115
Property must be located in England or Wales.
Excludes certain Central London postcodes.
Applicants must own and occupy their main residence or be in tied accommodation
The Swansea Building Society was founded as a mutual Building Society in 1923.
The Society continues to make good progress and with the support of our members, has every reason to look forward to a prosperous future.
Swansea Branch: 01792 739100
The Swansea Building Society Holiday Let Mortgage
Initial Rate: 5.25%
Standard Variable Rate: 5.25%
Max LTV: 70%
APRC: 5.40%
Loan amounts: £50,000 - £500,000
Minimum Property Value: £75,000
Application Fee: £250
Arrangement Fee: 1.5% of loan
Early repayment charge (ERC): 1% during the first three years.
Available to existing property owners who would like to purchase/remortgage a property which is used for holiday letting situated in Wales.
Leeds Building Society
Initial Rate: 2.44% (2 Years)
Standard Variable Rate: 5.99%
Max LTV: 70%
APRC: 5.3%
Minimum Property Value:
Minimum Loan:
Maximum Property Value: £500,000
Product Fee: £999
Early repayment charge (ERC):
Mortgage Exit Administration Fee (MEAF): £199
Specially for owners of properties in England, Scotland, and Wales who stay in the property themselves or who let out to holidaymakers as holiday homes.
Bath Building Society
Initial Rate: 1.15% Discount
Standard Variable Rate: 5.44%
Max LTV: 70%
APRC: 5.5%
Minimum loan amount: £50,000
Minimum Property Value: £100,000
Maximum Property Value:£500,000
Terms: 5-40 years
Product Fee: 0.75% of advance (Minimum £999)
Administration Fee: £125
Completion Fee: £75
Early repayment charges (ERC): 3% in year 1, 2% in year 2. Closing Admin Fee £100
The property must be in England or Wales and be of standard construction. No properties on sites.
Minimum age 25, no maximum, subject to income in retirement.
Household income must be at least £30,000.
The Cumberland
Initial Rate: 3.35% (3 Years)
Standard Variable Rate: 5.24%
Max LTV: 75%
APRC: 4.7% - 5.1%
Minimum loan amount: £75,000
Minimum Property Value: £150,000
Term: Up to 25 years
Fee: £1000
EU Nationals resident in the UK or UK ex-pats.
Leasehold properties should have a minimum of 85 years left on the lease at the start of the mortgage and 50 years on maturity
Available in mainland UK (up to 75% LTV) and the isles of Anglesey, Arran, Mull, Skye, Harris and Wight (up to 60% LTV)
Monmouthshire Building Society
Speak to Advisor Now
Initial Rate: 2.25% (2 Years)
Standard Variable Rate: 5.24%
Max LTV: 75%
APRC: 4.9%
Minimum Loan Amount: £40,000
Maximum Loan Amount: £1,000,000
Application Fee: £150
Product Fee: £999
Early repayment charge (ERC): 2% in first 2 years
Furness Building Society
Furness is an established mortgage provider of holiday let mortgages and has a range of mortgages to choose from whether your property is in England, Scotland or Wales.
Unlike some lenders we also allow customers to use their holiday let property for up to 90 days per year for their own personal use, it makes sense that you’ll want to use it too !
We adopt a flexible approach to lending and, unlike some lenders, we will include gross holiday rental income as well as personal income when calculating affordability for your mortgage
Initial Rate: From 2.49% (2 Years)
Standard Variable Rate: 5.79%
Max LTV: Up to 75%
APRC: 5.6% - 5.7%
Minimum loan amount: £50,000
Maximum loan amount: £500,000
Minimum Property Value: £125,000
Maximum Term: 40 years
Product Fee: £995-£1250
Early repayment charge (ERC): 2% in the first year and 1% in the second year
Total applicants’ earned income should be at least £30,000.
Maximum of 1 holiday let mortgage per borrower.
Together Financial Services
Designed for landlords who want to purchase or re-mortgage a property for short-term holiday lets.
With potentially higher yields available on holiday or short-term tenancy properties compared to standard buy-to-lets, this may be an attractive proposition for potential investors and landlords.
What's more, finance is available on a first or second charge basis with a maximum loan amount of £2 million.
We’ll consider many income sources, credit profiles and property types. If we can help, we will, it’s what we call common sense lending.
Interest Rates: From 6.99%
Max LTV: 65%
APRC:
Loan Amounts: £5,000 - €2,000,000
Applicants must be at least 18-years old. No maximum age limit, providing rental income covers 125% of total secured lending repayments.
Teachers Building Society
Initial Rate: 3.69% variable (2 Years)
Standard Variable Rate: 5.99%
Max LTV: Up to 75%
APRC: 5.9%
Minimum loan amount: £50,000
Minimum Property Value: £75,000
Maximum Property Value: £500,000
Application Fee: £99
Arrangement Fee: £1,299
Early repayment charge (ERC): 3%
Minimum income of main applicant is £25,000 (£40,000 if joint application).
Not available for first-time buyers or professional landlords.
Mansfield Building Society
At The Mansfield, our individual approach allows us to offer holiday let mortgage lending up to 70% loan to value (LTV).
Landlords owning, or looking to buy a holiday let, can occupy the property themselves for up to 60 days per year.
Initial Rate: 3.65% (3 Years)
Standard Variable Rate:
Max LTV: 70%
APRC: 5.6%
Minimum Property Value: £150,000
Maximum Property Value:
Application Fee: £199
Completion Fee: £1,800
Early repayment charge (ERC): 3%