Successful Holiday Letting Event 2025
Cornish Cottage Holidays proudly presents the return of ‘Successful Holiday Letting’. Gain valuable insights, tips, and marketing strategies for...
by Janine de Lange / Owner
Have you dreamt of owning your own holiday home in Cornwall? If yes, then an important step towards achieving this dream is finding a mortgage for a holiday home.
With holiday let owners earning an average income of £26,500 per year*, owning a self-catering property can be a highly rewarding and profitable venture. So, it’s no wonder more and more people are taking advantage of this lucrative investment opportunity.
Here’s our guide to understanding holiday let mortgages, why they’re a specialist product and what you’ll need to finance a holiday home.
If you’d like a FREE income and bookings proposal to support your holiday let mortgage, book a visit from our experts!
Use the quick links below for a specific topic, or read on for our guide to mortgages for holiday homes.
Charlotte’s House, Pendeen
As with most property investments, you’ll need to consider how best to finance your purchase, and which option is right for your individual situation. When buying a holiday home, the type of mortgage you’ll need will depend on how you intend to use the property.
Sea The View, Sennen
If you need to borrow funds to finance a holiday let, you will need a specialist holiday let mortgage. A holiday let mortgage is a tailored form of finance offered to owners who aim to buy a property for the purpose of letting it out, on a short-term basis.
The key difference between a standard buy-to-let mortgage and a holiday let mortgage is the seasonality of the letting. Holiday lets tend to make most of their money during the peak summer months and are likely to be quieter in the winter months. Lenders see this differently to a standard rental property, which will be occupied for the whole year round.
A holiday let and a short-term let both involve renting out a property for brief periods, but they cater to different markets and purposes. Here are the key differences:
Penmarth House, Coverack
Most mortgage providers will assess each case according to various criteria. This varies from lender to lender. Your credit history, income, property type, and any current mortgage commitments will be taken into consideration.
Here are some criteria you should be aware of:
You may need an income proposal for your holiday let’s mortgage lender. We’re happy to provide a letter including an annual projected income to support your mortgage application.
Visit our Let Your Cottage page to book your FREE bookings and income proposal.
While holiday let mortgages are growing in popularity, they are still a niche product. They are provided by smaller building societies rather than standard ‘high street’ banks. This may limit the lending options available, but it is still important to find the best deal that will work for you.
A holiday let mortgage specialist like Atkins Ferrie Wealth Management can offer professional advice and improve your chances of finding the right deal.
While the maximum you can borrow for a buy-to-let mortgage is 80% of the property’s value, you can only borrow 75% for a holiday let. This is because the short-term nature of a holiday let makes it riskier for the lender.
You will need to put down a deposit of at least 25% of the property’s value to potentially be approved for a holiday let mortgage.
Connie’s Cottage, near Porthleven
The costs associated with a holiday let mortgage vary depending on several factors. These include:
A mortgage deposit is required when purchasing any property. A holiday home mortgage deposit is based on the property’s worth, location, and income as per a regular mortgage, but the amount required is slightly higher.
As mentioned, this is normally at least 25% in relation to the value of the property you are buying. This is roughly 10% to 15% more than a deposit for a standard home mortgage.
For example, if you purchase a home worth £350,000, the minimum deposit you will need is £87,500.
Interest rates for a holiday let mortgage are typically higher than for a residential mortgage. Deals offered tend to be on two-year or five-year fixed rates. The amount of interest charged will also depend on the rental forecast of your holiday let.
Mortgage lenders typically expect you to make a gross rental income from your holiday let that is 145% of the mortgage payments, when calculated at 5.5% interest rates.
To get a realistic estimation, you must get a credible projection from a reputable holiday letting agent, like Cornish Cottage Holidays. This proof of projected gross rental income, also known as a mortgage support letter, is usually requested by any mortgage lender.
When you buy any property in addition to your main residence, be it a second home or holiday let, there is an additional Stamp Duty charge known as Higher Rates on Additional Dwellings tax (HRAD).
This starts at 3% and then rises in bands, climbing to 15% for the most expensive properties. Visit the HMRC website for more details.
Yes, holiday let mortgages are more expensive than regular buy-to-lets or second-home mortgages. This is because they are a specialist type of lending and holiday lets are a highly seasonal business.
This, coupled with fewer companies offering holiday let mortgages, means the interest rate will typically be higher than with a residential mortgage. There are, however, certain tax benefits you could claim, which could mitigate this extra cost to some extent. Keep reading to find out more.
The benefit of a holiday let mortgage for an owner is that, if your property is classed as a Furnished Holiday Let (FHL), your mortgage interest is tax deductible. This is because the money received from a FHL’s rental is classed as business income.
There are a number of other tax benefits to your property being an FHL, which you can read more about in our blog on tax for Furnished Holiday Lets. However, for your property to qualify as an FHL, you’ll need to meet the criteria set out by HMRC.
The Spring 2024 Budget included an announcement that the Furnished Holiday Let tax regime would be removed from 1st April 2025.
There will likely be a period of transition from that date. Technical guidance is due to be released shortly, which we’ll scrutinise alongside the legislation changes, and we will update our blogs as soon as possible subsequently. As of October 2024, the tax regime in this blog is still in existence.
Sea Two Seas, Cape Cornwall
Wondering how to find the best mortgage rates for your holiday property? Searching on comparison sites for holiday let mortgages is a great way to find the best price. Some examples of these are:
Above all else, we would suggest talking to a financial advisor who specialises in holiday lets to get their advice. Although online resources are a useful starting point, they can’t give bespoke advice based on your personal situation like a real advisor can.
For those buying a Cornish holiday let, we recommend professional mortgage advice from an independent mortgage expert at Atkins Ferrie Wealth Management.
Atkins Ferrie Wealth Management is a South West-based Independent Financial Adviser. They offer the highest ethical principles and best service standards available from any independent adviser in the UK.
AFWM has offices in Helston, St Agnes and St Ives. Their mortgage team helps many clients achieve their ambitions of owning one, or multiple holiday homes in the stunning coastal and countryside setting of Cornwall.
St Ives Harbour
Buying a holiday home in Cornwall is, for many, an aspiration. So, having the opportunity to own a holiday property as well as a lucrative letting business is an obvious appeal.
The staycation sector continues to go from strength to strength. 2024 bookings for our Cornish properties are currently up 3% compared to 2023, and half of holiday home owners in our recent survey said they were likely to buy another holiday let in the near future*.
For further expert advice, read our guide to buying a holiday home in Cornwall.
Sea Scape, Sennen
From associated costs and best locations, to rental rates and what your property is going to look like, there are many factors to consider when investing in a holiday let.
Finding the right holiday letting agency in Cornwall can make all the difference to help you achieve holiday let success.
Partnering with a local team of industry experts like Cornish Cottage Holidays, who specialise in Cornwall’s self-catering holiday market, is key to your property’s earning potential and overall success.
We want letting your holiday home to be as enjoyable and as effortless as possible, so we’ve created some helpful guides to answer any queries that you may have.
Visit our website or call 01326 573808 to book your FREE bookings and income proposal, or request your FREE Owner’s Pack.
Of course, this depends on your individual circumstance. However, obtaining a holiday let mortgage can be more challenging compared to a residential mortgage.This is because there are fewer holiday let mortgages available, and lenders consider them riskier.
As a result, interest rates are higher and affordability checks are more rigorous. You may need to demonstrate that you can afford the repayments on the holiday let even without any income from holidaymakers.
Yes, you can remortgage your house to buy a holiday let. Refinancing your current mortgage will release equity from your home which can then be used as a down payment or to cover the purchase price of a second property.However, you must consider the costs involved. We would suggest speaking with a financial advisor or mortgage advisor to discuss your options.
Yes, most holiday home mortgage lenders will allow first-time landlords, however, it may be more challenging than for experienced property owners. You will need to have a solid rental projection from a professional agent to ensure you can afford the monthly payments.As a first-time landlord, you may face higher interest rates and stricter eligibility criteria. Some lenders may also ask for slightly higher deposits. Again, it’s best to chat with a professional advisor before making any decisions.
*Stats sourced from the Sykes Holiday Letting Outlook Report 2024.
At the time of publishing, Cornish Cottage Holidays has taken all reasonable care to ensure that the information contained in this article is accurate. However, no warranty or representation is given that the information is complete or free from errors or inaccuracies. Generic information is contained within this article and each individual’s financial affairs are different, further advice should be sought from a mortgage broker.
Discover how a local brand with national reach can work for you. With over 50 years of letting experience, we pride ourselves on delivering the bookings you deserve.
Find out how we can work together. With over 25 years’ experience, our local expertise will give you peace of mind and bring you the bookings you deserve.
by Janine de Lange / Owner
I’ve had the privilege of living in the beautiful South West since 2010, and in my opinion there’s no better place in the worl...
Read More About Author
Sign up to receive exclusive offers, competitions and the latest news to your inbox, and you'll be entered into our monthly prize-draw 3 times!
Cornish Cottage Holidays proudly presents the return of ‘Successful Holiday Letting’. Gain valuable insights, tips, and marketing strategies for...
Holiday home interior design is an essential part of making your holiday let a success. A well-designed, inviting space...
Starting a holiday let can be a profitable and rewarding venture. But in order to make it successful and...
