How holiday let mortgages work
A holiday let mortgage is for a property you rent out to holidaymakers for short stays. Lenders usually work out how much you can borrow from the expected holiday rental income, often using an estimate from a letting agent, as well as your own income.
Deposits are typically larger than for a home you live in, often 25% or more, and many holiday let mortgages are interest-only.
Worked example
A £350,000 property with a 30% deposit of £105,000 means borrowing £245,000. At 6% over 25 years, interest-only payments are £1,225.00 a month; on a repayment basis they're £1,578.54 a month, £473,561.53 in total.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Costs and tax
Holiday lets have costs that ordinary lets don't, such as cleaning between stays, furnishing and periods without bookings. Some councils also charge extra council tax on second homes.
The special tax treatment for furnished holiday lettings ended in April 2025, so holiday lets are now taxed much like other rental property. Check your position with an accountant.
Inputs for the holiday let mortgage calculator
Property price
The price of the holiday let property.
Deposit
Your deposit. Holiday let lenders often ask for at least 25%.
Interest rate (per year)
The annual interest rate on your mortgage. The rate shown is only an example, so enter the rate from your quote.
Term
How many years the mortgage runs for.
Repayment type
Interest only covers just the interest, so the full loan is owed at the end. Repayment clears the loan over the term.
CALCULATOR QUESTIONS
Holiday let mortgage calculator questions
How do lenders assess a holiday let mortgage?
Mainly on the expected holiday rental income, often from a letting agent's estimate, together with your own income and credit history.
How much deposit do I need for a holiday let?
Often 25% or more of the property's price, depending on the lender and the property.
Is a holiday let mortgage the same as buy-to-let?
No. Buy-to-let mortgages are for longer tenancies. Holiday lets are short stays, so lenders assess the income differently.
Do holiday lets still get special tax treatment?
No. The furnished holiday lettings tax regime ended in April 2025.