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Holiday let

No fuss, common-sense approach to lending.

Mature couple arrive at vacation home with bags

Criteria for buying a holiday rental


Principality are one of the few lenders who consider holiday let applications across England and Wales.

If your client is looking to buy a property to use as a holiday home, there are a few things that need to be considered. Your client:


  • should be 21 years old or older
  • should have no more than 2 mortgaged holiday lets, whether in sole or joint names, including the current application.
  • can be a first time buyer or landlord



What you need to know 

We offer a range of holiday let products for purchases and re-mortgages, whether your client is looking to purchase their first property to let or expanding their current portfolio. Please note: applicants can stay in the property for up to 2 months per annum. 

  • there is no minimum income requirement
  • we consider Non-EEA applicants
  • we consider non-regulated holiday mortgage applications on an advised basis
  • we accept applications from applicants who do not currently own and live in their own home
  • the maximum LTV for a holiday let mortgage is 75%
  • the minimum property value and purchase price is £50,000  
  • the minimum loan size is £25,000
What are the loan to value limits?
Loan to valueMinimum loan size
Maximum loan size
60% 
£25,000 
£1,000,000 
75% 
£25,000 
£750,000 

How is affordability 
calculated?

We require rental coverage for different lending scenarios. 


Scenario 1 

Your client purchased their property before January 2017 as a holiday let. They would like to remortgage pound for pound.  


Rental coverage we require: 125% at 8.25% as rental coverage  

 

Scenario 2

Your client purchased their property after January 2017 as a holiday let. They would like to remortgage pound for pound.  


Rental coverage we require: 145% at 8.25% as rental coverage   


Rental income is calculated using an average of the projected low, mid and high season weekly rental yields. 


This is usually multiplied by an assumed occupancy level of 30 weeks and divided by 12 months. This is then applied to the rental coverage calculation.  


Typical example

John has a holiday home. His weekly rental changes depending on season: 


High season: £700 per week 

Mid season: £500 per week

Low season: £300 per week 

Season average: £500 per week


His monthly rental is calculated as follows: 

John’s average monthly rental is £500 x 30 (weeks) ÷ 12 (months) = £1,250 

John’s rental coverage calculation (RCC) is £1,250 ÷ 1.45 = £862.07 

RCC divided by current stress rate is £862.07 ÷ 0.0845 = £10,202.01 

RCC multiplied by 12 months is £10,202.01 x 12 = £122,424.12


This means the maximum John could lend from us would be £122,424.12.

An illustrated percentage symbol within a circle.

View our Holiday Let mortgages

Want to find out more, view our Holiday Let range.