Holiday Let Mortgages

Looking to turn that beachside cottage or countryside retreat into a short-term rental? A holiday let mortgage is designed exactly for that: renting out a property to holidaymakers on a short-term basis while still allowing you to enjoy the place yourself now and again. 

With more of us choosing to holiday in the UK, owning a holiday let can be a smart mix of business and pleasure. Short-term lets can bring in strong returns, especially during peak seasons. But if you’re planning to buy with a mortgage, you’ll need the right one for the job. 

What Is a Holiday Let Mortgage?

A holiday let mortgage is built for people who want to buy a property and rent it out to guests for short stays—think weekends away, summer breaks, or festive getaways. 

It’s not the same as a standard residential mortgage or a buy-to-let. It’s a specific type of home loan made for properties that you’ll rent out on platforms like Airbnb or through traditional letting agents.

Lenders look at how much money the property can realistically make as a holiday rental. That includes seasonal highs and lows. They might ask for a rental income forecast from a local holiday lettings expert or look at similar properties in the area.  

When Do You Need a Holiday Let Mortgage?

If your plan is to make money by renting out a property to holidaymakers (even part-time), you will need a holiday let mortgage if you're looking for a long-term borrowing solution to complete the purchase. 

Even if you plan to use the property yourself now and then (most lenders will allow you to use the property for up to 90 days in a year and still qualify for a holiday let mortgage), as long as it’s also being let out for profit, this is the route to go down.

Regular residential mortgages are a complete no-go, as they don’t cover short-term letting, and using one that way could land you in hot water with your lender. A holiday let mortgage keeps things above board, transparent, and tailored to what you actually need.

Holiday Let Mortgage Vs. Buy-to-Let

On the surface, both types of mortgage are designed to help you buy a rental property, and both are usually offered on an interest-only basis, so you only make the interest repayments each month and have a separate plan to repay the capital as one lump sum at the end of the term (usually by selling the property). 

Repayment mortgages are also available for each, which means you can pay down both the interest and capital borrowed during the loan term, but monthly payments would be higher using this method. 

But that’s pretty much where the similarities end. Buy-to-let mortgages are for long-term tenants who sign contracts for six months or more. Holiday lets are for short stays and weekend getaways, with guests changing every few days or weeks.

Because of that, the income from a holiday let can be higher overall, but less consistent. That makes holiday let mortgages a bit trickier to qualify for. Lenders want to know the property can pull in enough cash even during quieter seasons. 

To do this, lenders tend to use a weekly or monthly rental average across high, medium and low seasons when assessing how much you can borrow for a holiday let mortgage. 

Property Types

Any property that you’re planning to rent out to short-term guests will usually need a holiday let mortgage. That could be a city flat, a lakeside lodge, a coastal cottage, or a converted barn. The key is that it’s furnished and available to paying guests as a short-term commercial rental.

Lenders will consider properties more attractive in areas with proven tourism demand. Think Cornwall, the Cotswolds, the Lake District, Devon, or any other popular UK holiday spot. If the location is a place people love to visit, and your property is ready to welcome them, you’ll stand a better chance of securing the mortgage you need.

Which Types of Property Don’t Qualify?

Not every property can be a holiday let. If it’s in an area with strict planning rules (think caravan or holiday parks) or has legal limits on how often it can be let out, it might be a no. 

The same goes for non-standard construction properties, listed buildings with restrictions, or properties needing major renovation.

Also, if you’re not actually planning to let the property out commercially—or if you’re aiming for long-term tenants instead—you’ll need a different type of mortgage. Holiday let mortgages are for exactly that: short stays, paying guests, and making money through the holiday market.

How Much Deposit Would You Need?

Most holiday let mortgages require at least a 25% deposit. Some lenders might ask for 30% or more, depending on the property, your financial situation, and how strong the projected rental income looks.

The big difference here is that affordability is judged mainly on the property's rental potential, not just your salary or day job. So while your personal finances still matter, what the property can earn is what really counts.

How Much Can You Borrow?

This depends on how much income the property can generate as a holiday let. Lenders will often ask for a professional rental forecast and may also run stress tests to check that the property would still cover costs during off-peak months.

You can usually borrow up to 75% of the property’s value, but the actual amount is determined by taking the average weekly or monthly rental income across high, medium and low seasons. This figure typically needs to cover between 125% and 145% of your mortgage repayments.  

So, to use a very basic example, if your mortgage repayments were £1,000 per month, the average monthly rental premiums from your holiday let property across all seasons would need to be between £1,250 and £1,450. 

Which Mortgage Lenders Can Help?

Holiday let mortgages are available through several very knowledgeable and experienced specialist lenders. As most specialist lenders tend to work only through intermediaries, you’ll need some help from a mortgage broker to find the right one who can help with your application. 

This is where we come in! 

Through our sister brand, Haysto, we’ve made mortgages possible for thousands of people with a whole range of complex mortgage needs, including those who are looking to buy a holiday let property. 

We’ve built close working relationships with many of the U.K.’s most respected specialist mortgage lenders, such as United Trust Bank, West One Loans, The Mortgage Lender and Buckinghamshire Building Society. 

All these lenders have the right expertise to deal with this type of lending and will happily consider applications for holiday let mortgages. 

Who Can Have a Holiday Let Mortgage?

Holiday let mortgages aren’t just for seasoned investors. Whether you’re a first-time landlord, retiree, or just someone looking for a second income stream, you could be eligible. 

You don’t always need landlord experience, but it definitely helps. Ultimately, lenders want to see that you have a solid financial footing and a clear plan for running the holiday let as a business.

What Are the Typical Eligibility Criteria?

Each lender has their own checklist, but here’s what most of them are looking for:

• A deposit of at least 25–30%

• A good credit score and clean credit history

• Reliable rental income forecast from a holiday letting agent or expert

• Evidence of personal income—often around £25,000+ per year

• Property available for commercial rent for the majority of the year (usually at least two-thirds)
  

Some may also look at your age, existing mortgage commitments, and whether you’ve let out a property before. Want to keep it simple? Working with a broker who understands the holiday let market (like us!) can make the process much smoother.

Pros and Cons

Like any investment, holiday let mortgages come with highs and lows. Here’s the good and the bad:

Why They’re a Great Idea:

• If the property is in a sought-after spot and well-managed, you can see strong returns.

• Short-term lets can earn more per night than standard rentals, especially during school holidays and seasonal peaks. 

• You get the flexibility to block out time for personal use.

What to Watch Out For:

• Income isn’t always predictable, especially in off-season months.

• There’s more admin involved in managing guest turnover, maintenance, and cleaning. 

• Some lenders are stricter with affordability criteria and deposits.

• Interest rates for holiday let mortgages tend to be higher than for residential mortgages and traditional buy-to-let mortgages.

• Not all properties qualify due to planning restrictions or location. 

• For additional homes, like holiday lets, there is a 3% surcharge for stamp duty.

Furnished Holiday Lettings (FHL) Tax Relief

Whilst there are still certain tax reliefs and allowances available for holiday lets, the more wide ranging furnished holiday lettings (FHL) tax reliefs were abolished as of 6th April 2025.  

How Did It Work?

To qualify for certain tax advantages, such as mortgage interest relief and capital allowances on furniture, your property needed to be based in the U.K., furnished, and pass the following occupancy tests:

• Long-term occupations of 31 days or more could not surpass more than 155 days in any one tax year

• The property must have been available for commercial let for at least 210 days per tax year

• The property must have been commercially let for at least 105 days in a tax year

Holiday lets now receive the same tax treatment as standard, long-term rental properties, which means you can still claim a 20% tax credit on your mortgage interest payments.