Holiday homes can be a great getaway and a fantastic investment at the same time, as the value of the property increases. With airbnb these days, you can rent it out short term during peak periods and enjoy the property when it’s not occupied.

When investing in property, there are 2 main things we usually for, 1, the potential capital growth and 2, the rental yield. Both can be achieved in some areas, but it may depend on the location and how the property is leased.

Traditionally, long-term tenants will pay a lower rental income, but you will have security knowing you will receive income each week and also pay lower agent fees. This option does not allow you to enjoy the property yourself when it’s not leased.

On the flip side, you could have higher rental income leasing it short term, but you run the risk of the property not being leased all the time. Management fees could also be costly in this instance as you pay agents to manage the checkin and check out process, cleaning etc. You do, however, have the option to enjoy the property when it’s not leased. Some lenders will also limit the income you can use when leased short term, this may impact how much you can borrow.

Obtaining a loan for a holiday home is very similar to purchasing any property, you can potentially borrow up to 95% of the value of the property. Ideally it would be best to stay around the 80% or if possible, use the equity in your current home (if any) to cover the deposit.