They are different from standard buy-to-let mortgages, as holiday let properties are often rented out on a short-term basis (to holidaymakers) rather than to long-term tenants.

How Holiday Let Mortgages Work:

Purpose: The property is purchased with the intention of being let out to guests on a short-term basis. You might use platforms like Airbnb or a holiday rental agency to manage the bookings.

Lender Criteria:
Lenders typically have specific requirements for holiday let mortgages, which may include:

• A minimum personal income (often around £20,000-£30,000).
• Proven rental income from the property that is sufficient to cover the mortgage payments. Lenders may require evidence that the property can generate rental income during high and low seasons.
• The borrower may need to demonstrate a good credit score and affordability.

Deposit Requirements: You typically need a larger deposit than for residential mortgages, often between 25% and 40% of the property’s value.

Rental Income Calculations: Instead of basing the loan on your personal income alone, lenders will assess the potential rental income of the holiday let property. They may use projected income during peak times and allow for quieter months.

Usage: Holiday let mortgages allow you to use the property yourself for part of the year, provided it is let out as a commercial holiday let for the remainder of the year.

Interest Rates and Terms: Holiday let mortgages may have slightly higher interest rates than standard residential mortgages due to the higher perceived risk of short-term lets. The loan terms may vary from lender to lender, typically around 20-30 years.

Tax Benefits: If the property meets the criteria to be classed as a Furnished Holiday Let (FHL) by HMRC, you can benefit from certain tax advantages

Overall, holiday let mortgages provide a way to own a property that can generate income through short-term rentals, but they come with additional criteria and responsibilities compared to standard buy-to-let mortgages.