Last reviewed: June 2026
TL;DR- A holiday home mortgage is a second residential mortgage on a property used by the owner for personal holidays rather than let to paying guests.
- Affordability is assessed on the borrower's personal income - rental income from the holiday home is not counted unless the property is formally let.
- Stamp duty additional dwelling surcharge applies to the holiday home purchase in England and Northern Ireland.
- Some lenders restrict their second home mortgages to specific property types or locations.
Holiday Home vs Holiday Let
The key distinction is the borrower's intended use. A holiday home is purchased for the owner's personal use - family holidays, weekend breaks - and is not intended to be commercially let to paying guests. A holiday let is a commercial investment property let to short-term paying guests for income. Lenders assess these very differently: a holiday home is assessed on personal income only; a holiday let is assessed on projected rental income. Most residential mortgage products prohibit short-term commercial letting, meaning a holiday home owner who wishes to let commercially needs either a holiday let mortgage or explicit consent from their lender.
Affordability for Holiday Home Mortgages
Holiday home mortgages are assessed on the borrower's personal income in the same way as the primary residence mortgage, but with the additional context that the borrower already has a primary residence mortgage. Lenders assess whether the borrower can afford both the primary residence mortgage and the holiday home mortgage simultaneously from personal income, typically using the stressed rate affordability approach required by FCA MCOB rules.
The additional mortgage commitment on the holiday home reduces the maximum amount available by increasing the monthly committed expenditure in the affordability model. Borrowers with high income relative to their existing commitments are best placed to qualify for a second home mortgage.
Stamp Duty on Holiday Home Purchases
Purchasing a holiday home in England or Northern Ireland triggers the additional dwelling SDLT surcharge on top of standard residential rates, because the buyer already owns a residential property (their primary residence). The surcharge rate is currently 3% (check GOV.UK for current rates). Equivalent additional charges apply in Scotland (LBTT) and Wales (LTT). The SDLT cost on a second home is therefore meaningfully higher than on a primary residence purchase at the same price.
Location and Property Type Restrictions
Some lenders restrict second home and holiday home mortgages to certain property types or locations. Properties in popular holiday areas that are predominantly used as second homes rather than primary residences may face higher LTV restrictions or outright restrictions from some lenders, on the basis that these markets can be more volatile. Properties without year-round road access, in flood plains, or with limited services may also face restrictions.
Frequently Asked Questions
Can I occasionally let my holiday home to friends without affecting the mortgage?
Most residential mortgage terms permit occasional letting to friends and family without triggering the need for a BTL mortgage, provided the letting is genuinely occasional and not commercial. However, "occasional" is not formally defined and lenders interpret this differently. Listing the property on commercial letting platforms like Airbnb would typically breach the terms of a standard residential mortgage. Borrowers should check their specific mortgage terms and, if in doubt, contact their lender for clarity.
What maximum LTV is available on a holiday home mortgage?
Maximum LTV on second home and holiday home mortgages is typically 75-85%, requiring a deposit of 15-25%. Some lenders restrict further for properties in specific locations or with characteristics that reduce liquidity. Standard 90-95% LTV products are generally not available for holiday home purchases.
Does owning a holiday home affect my primary residence mortgage?
The holiday home mortgage appears as a committed debt on the credit file and is factored into affordability assessments for any subsequent mortgage applications, including remortgaging the primary residence. The additional monthly commitment of the holiday home mortgage reduces the assessed disposable income in any future affordability calculation.
Can a holiday home later be converted to a primary residence?
Yes, if the borrower moves to live in the holiday home as their primary residence, they should notify the lender. Most lenders would require the mortgage to be assessed against standard residential affordability criteria for the property, which it should already meet. If the original primary residence is sold, the holiday home mortgage becomes the only mortgage and the property simply becomes the primary residence. The tax implications (CGT on the original primary residence if it is sold, changes to the holiday home's CGT treatment) should be discussed with a tax adviser.
