Holiday let mortgage availability doubles since August 2020

Rozi Jones
6th April 2021
holiday home 2
"Consumers may have taken some time to reflect on staycations in light of uncertainties surrounding international travel and how a holiday let could be a worthy investment."

As the lack of opportunity for international travel incites consumers to consider staycations, analysis by Moneyfacts reveals a notable rise in the number of buy-to-let options for holiday let over the past six months, during a surge of holiday home sales.

Its research shows that mortgage options for borrowers looking at holiday lets have grown by 45% in the past six months and product availability is double that in August 2020.

There are now 149 products available on the market, up from 103 in October 2020 and 74 in August 2020.

Additionally, the number of lenders now offering holiday let products has increased to 21, up from 14 in August and 17 in October.

However, the average fixed rate has increased over the same period, from 3.53% in August to 3.79% in October and 3.95% today.

Rachel Springall, finance expert at Moneyfacts, said: “Consumers may have taken some time to reflect on staycations in light of uncertainties surrounding international travel and how a holiday let could be a worthy investment. Lenders have moved over the past six months to cater to the demand for those looking to invest in property, as there has been a rise in holiday let deals of 45%, and product availability has in fact doubled since August 2020.

“There are now more lenders offering options than six months ago – back to a spread seen in March 2020 before lockdown began – but it appears that building societies are more inclined to provide deals to meet growing demand, whether for someone who uses their own home or takes out a new loan to fund the holiday let investment. According to a recent survey by Hodge Bank, out of those purchasing a holiday home, 65% take out a new holiday let specific mortgage and 35% remortgage their existing home to finance their holiday home.

“Supply and demand may well be a key issue in 2021 for investors who feel staycations are here to stay awhile yet, and indeed according to Rightmove, national new listings stock is down 25% year-on-year. Any lack of holiday home opportunities will come as frustrating news for investors considering the return of holiday let deals on to the market, especially as sales figures nationally are rising and some consumers have more disposable income from lockdown and are therefore ready to invest. Data from PropertyMark cited that one in nine properties nationally sell more than the asking price, with recent figures hitting a five-year high.

“Clearly, for any opportunities that prospective borrowers are contemplating, it is wise they approach an independent qualified financial adviser to go through the deals currently available and to get some valuable insight into the workings of a holiday let, including tax benefits, rules regarding residency periods, rental income desirability and requirements, and other potential expenses outside of utility bills.”


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