Mortgage options for buying a second home or holiday let

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Mortgage options for buying a second home or holiday let

Despite increases in stamp duty for second homes being introduced, holiday lets provide many owners with good investment returns. Following the pandemic, the UK domestic holiday industry has shown strong growth, with reports indicating a 10.2% increase in the number of guest nights for short-term lets in the UK between July 2024 and June 2025.

If you are considering purchasing a second home or holiday let and require a mortgage, this article outlines the different options.

What counts as a second home or holiday let?

Under the UK government’s tax treatment guidance, a second home is one that is substantially furnished but is not used as anyone’s main residence. A holiday let is defined as a property that is available for short-term letting to the public for at least 210 days in a tax year and is actually let for at least 105 days.

Mortgage options for second homes

The type of mortgage you will require for a second home will depend on how you intend for it to be used:

Second home mortgage – If you are planning to live in the property yourself as a personal holiday home or weekend base, you can take out a second home residential mortgage. This type of mortgage will usually require a deposit of around 15% to 25%, which is larger than standard residential mortgages.

Buy to Let mortgage – If your plan for the property is to rent it out to tenants, you will require a Buy to Let mortgage. This will also typically involve providing a large deposit amount of around 25% or more.

Mortgage options for holiday lets

Holiday let mortgage – Buying a second property to rent out as short-term holiday accommodation will require a holiday let mortgage. Lenders will often request a deposit of at least 25% and the projected rental income will be factored into the borrowing amount.

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Key differences between second home and holiday let mortgages

The main differences between second home and holiday let mortgages include:

  • Purpose of use – A second home mortgage is for properties where the owner will be living in the property periodically, while a holiday let mortgage is for properties used to rent out to the public.
  • Affordability assessment – When assessing affordability for a second home, the applicant’s personal income will be the main factor. Affordability calculations for holiday lets will be based around projected rental income, considering details such as the location.
  • Deposit amounts – A second home mortgage deposit will generally be lower than the deposit required for a holiday let.

What lenders consider when assessing applications

Lenders want to ensure that the applicant will be able to afford mortgage repayments, so for second homes, the applicant’s income will need to cover both the mortgage for their main home and their second property. For holiday lets, the rental income should cover at least 125% (or sometimes more) of the mortgage payments.

Lenders will also review:

  • Credit history
  • Any existing debts
  • Location of a holiday home to verify demand levels
  • Suitability of the property for a holiday let
  • How much deposit the applicant is providing

Finding the most suitable mortgage deals for second homes and holiday lets

Arranging a mortgage for second homes and holiday lets can be more complicated than standard residential mortgages, so a specialist mortgage broker is beneficial in finding suitable deals. 

At James Leighton Financial Services, our mortgage brokers work with a wide range of lenders specialising in second home and holiday let mortgages and we can provide guidance on the most suitable options based on your circumstances. Contact us to discuss your property plans so we can guide you accordingly.

Holiday Let Mortgages are not regulated by the Financial Conduct Authority.