Holiday let calculator
Model a holiday let the way lenders do: three seasons, real costs and a stressed mortgage. Net cash flow, cash-on-cash, break-even occupancy and interest cover in one place. Free, no sign-up.
1. Purchase and finance
2. Seasonal income
Booked weeks add up to more than 52. Check the season split.
3. Running costs
4. Stress test
Your holiday let
Income and costs
Returns
Lender stress test
Illustrative only. Not a quote, not advice and not an offer of finance. Lenders set their own income, stress rate and cover criteria.
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Why a flat monthly rent gets holiday lets wrong
A holiday let does not earn the same every month. A coastal cottage can take three times as much in August as in February, and the low season often decides whether the year works. Lenders know this, which is why they underwrite a holiday let on a blended low, mid and high season projection rather than a single monthly figure, then stress-test the mortgage against it. This calculator is built the same way, so the number you take into a lender conversation is the one the lender will actually look at.
How the calculator works
Rental income is each season's weekly rate multiplied by the weeks you expect to book, added together. Changeovers are the booked nights divided by your average stay, and each one brings in the guest cleaning fee and costs you the cleaning and laundry figure. Platform fees are charged on the rental income and cleaning fees, the management fee is charged on the rental income (plus VAT if you tick the box), and the maintenance reserve is a percentage of total income. Utilities, insurance, rates, compliance and other costs are fixed. Net operating income is total income less all operating costs, and net cash flow is net operating income less the annual mortgage payment.
Cash-on-cash return is net cash flow divided by the cash you put in: the deposit, the purchase costs and the furnishing and setup. Gross yield is total income over the purchase price and net yield is net operating income over the purchase price. Break-even occupancy is the number of weeks you need to book, at your average weekly rate, to cover every fixed cost and the mortgage, shown as a share of the 52-week year. Setup payback is the furnishing and setup cost divided by the annual cash flow.
The lender stress test
Most holiday let mortgage lenders test the projected rental income against the mortgage interest at a stressed rate, looking for interest cover commonly between 125 and 145 percent. The calculator takes your three-season rental income, divides it by the interest on the loan at the stress rate you set, and shows the cover achieved. It then works backwards to the largest loan that income would support at your chosen cover ratio. If the maximum loan comes in below the loan you need, expect to put in a larger deposit or look for a lender with a lower stress rate or cover requirement.
Lenders normally want the seasonal projection from a local holiday letting agent rather than your own estimate, and some apply their own average of the three seasonal rates over a set number of let weeks. Treat the stress test here as a sense check before you apply, not a decision in principle.
Worked example
Take the default figures: a 350,000 pound cottage with a 25 percent deposit, a 262,500 pound repayment mortgage at 5.5 percent over 25 years, and 36 booked weeks split across 12 high, 14 mid and 10 low season weeks. Rental income is 42,100 pounds, and with cleaning fees and extras total income is 47,380 pounds. After platform fees, a 20 percent management fee plus VAT, cleaning, utilities, insurance, rates, compliance and a 5 percent maintenance reserve, operating costs come to 31,580 pounds and net operating income is 15,800 pounds. The mortgage costs about 19,344 pounds a year, leaving net cash flow of roughly minus 3,544 pounds. On interest only the same deal makes about 1,363 pounds a year, and it still slips into a loss if bookings fall by 20 percent.
That is the point of the exercise. The rental income covers the interest at a 5.5 percent stress rate by 292 percent, so on this income a lender test would support a loan well above the one needed, yet the deal loses money on a capital and interest basis once real running costs are in. Break-even occupancy is around 80 percent of the year on a repayment mortgage and 65 percent on interest only. Passing the lender's test and making money are two different things. We would look at the management route, the rate achievable in each season and the repayment structure before going further.
If the result is marginal
- Check the low season. A few extra winter weeks can move the result as much as a higher summer rate.
- Price the management route properly. On the example above, full management at 20 percent plus VAT costs over 10,000 pounds a year, so compare it with a hybrid route using a local changeover team.
- Compare interest only with capital and interest. Interest only improves cash flow but leaves the full loan to repay at the end of the term.
- Get a letting agent's three-season projection before you offer. It is the figure the lender will use.
- On a holiday park, check the site licence, the season length, the pitch fee and the park's resale rules, which all affect income and lender appetite.
Holiday let calculator: common questions
What does the holiday let calculator work out?
It builds the year from low, mid and high season weekly rates multiplied by the weeks you expect to book, adds cleaning fees and extras, then deducts platform fees, management, cleaning, utilities, insurance, rates, compliance and a maintenance reserve. After the mortgage it gives you net cash flow, cash-on-cash return, gross and net yield, break-even occupancy and setup payback, plus a lender-style stress test showing the interest cover your projected income achieves and the maximum loan it would support.
How do lenders assess income on a holiday let?
Most holiday let lenders do not use a flat monthly rent. They work from a three-season projection, usually from a local letting agent, that blends low, mid and high season weekly rates. That income is then tested against the mortgage at a stressed interest rate, with an interest cover ratio commonly in the region of 125 to 145 percent. Some lenders average the seasonal rates over a fixed number of let weeks rather than using your own booking forecast, so the lender figure can be lower than your projection. The stress test panel in the calculator lets you set the stress rate and cover ratio to match the lender you are considering.
Why does break-even occupancy matter?
Break-even occupancy tells you how many weeks of the year you need to book just to cover the running costs and the mortgage. A holiday let that needs 60 percent occupancy to wash its face is far more fragile than one that needs 35 percent, because a wet summer, a new competitor or a platform algorithm change can take a few weeks out of the diary. The lower the break-even, the more room you have when bookings dip.
Can I use it for lodges, static caravans, cottages and Airbnb-style lets?
Yes. The maths works for any furnished holiday accommodation let by the night or week, including lodges and static caravans on a holiday park, cottages, coastal apartments and city short lets. On a park, add the annual pitch or site fee to the other costs line, and remember that some lenders treat a holiday home on a park differently from a freehold cottage, so check the tenure and the park's licence before you apply.
Should I include the management fee VAT?
If your letting agent is VAT registered and you are not, the VAT on their fee is a real cost to you, so tick the box and the calculator adds 20 percent to the management fee. If you self-manage, set the management fee to zero and put your realistic time and any changeover staff costs into cleaning and other costs instead.
Is this calculator free?
Yes. There is no sign-up, no paywall and nothing to download. Everything runs in your browser and nothing you enter is stored or sent to us. If you want a real view on whether the deal is fundable and on what terms, send us the numbers and we will come back within one working day.
Stress-tested the numbers?
Send us the property, the seasonal projection and your figures and we will come back with a view on fundability and likely terms within one working day.