Best Holiday Let Mortgage Rates Compared

When you’re buying a property as a holiday let, using a likely mortgage rate to help budget is useful. Here, we look at the average rate you could secure for your new house, what today’s best interest rates are and how a broker could help you get the best deal possible. Finally, we explore if rates for a regular buy-to-let are any different.

The table below provides an immediate illustration of some of the best interest rates currently available for holiday-let mortgages.

The rates quoted above were correct at the time of writing (April 2023) and are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time. 

What is the average interest rate for a holiday let mortgage?

At the time of writing (April 2023), interest rates for these products are generally between 5%-6%. The rate you finally secure will depend on factors in your specific situation and circumstances.

For instance, lenders for holiday let products usually want to see projected rental income to be between 125% and 145% of the mortgage interest. If it’s less than that you may struggle to get a competitive deal. Your rate will also be affected by the repayment structure you choose, such as fixed-rate versus variable, the length of your fix, interest-only versus repayment.

As with standard mortgages, you can improve your chances of getting a better rate with a higher deposit. In general, holiday let mortgages have a maximum loan to value of 75%-80%. Additionally, meeting or exceeding lenders’ minimum personal income levels can be beneficial, with minimum requirements often between £20,000 and £40,000. Lenders will also scrutinise your credit history for any past issues.

How a broker can help you get a better holiday let mortgage deal

Seeking the advice of a broker can prove invaluable when looking for a holiday let mortgage. With their in-depth knowledge of this area of the market, a broker will suggest a lender who can offer the best deal available to you specifically.

They do that by taking into consideration all factors in your application – such as the rental income for your property, your deposit, or your past credit history. Plus, they may even have access to specialist rates that aren’t available to members of the public – broadening the range from which you can eventually choose, making it easier to secure a lower rate.

If you get in touch we can arrange for an experienced broker we work with to give you a call straight away.

Are the rates any different to regular buy-to-let?

Yes they are. While for holiday lets you can expect to pay 5%-6%, for a standard buy-to-let mortgage the average rate is 4.5-5%. Regular buy-to-lets are cheaper as the risk to lenders is generally seen to be lower.

When deciding between a holiday let and a standard buy-to-let, the other financial consideration to take into account is the difference in tax calculations. At the time of writing (April 2023), holiday let owners can offset the entirety of their finance costs, minimising their taxable income. Standard buy-to-let properties can no longer deduct costs such as mortgage interest or set-up fees, but instead only qualify for a tax reduction at the basic income tax rate.

However, if you are buying a second property, you’ll still pay an extra amount of stamp duty with either a holiday let or a buy-to-let. That’s currently 3% on top of standard rates.

Why Use Online Money Advisor?

Securing the best rate possible for your mortgage loan can reduce your costs, improving your profits. However, finding that rate can be tough to do on your own, as the range for mortgage is large. This is where we can help!

Our unique broker matching service is designed to find you the right mortgage broker for your specific requirements. A broker who will know what lenders you meet the eligibility criteria for and, therefore, the lowest rate you can potentially secure.

Call 0808 189 0463 or make an enquiry and we can arrange a free, no-obligation call with a buy to let mortgage broker with the right experience today.