Holiday Let Mortgages
Owning a holiday home can offer the best of both worlds, a beautiful place to escape to, and a potential source of income when you’re not there. If you’re purchasing a property specifically to rent to guests on a short-term basis, you’ll need a holiday let mortgage, not a standard residential or buy-to-let loan.
Holiday lets operate more like a business than a traditional rental, so specialist lending solutions and careful planning are essential.
What Is a Holiday Let Mortgage?
A holiday let mortgage is designed for properties rented to guests on a short-term basis, typically through platforms like Airbnb, Vrbo or traditional cottage-letting agencies.
To qualify, lenders usually expect the property to be:
- Available to holiday guests for at least 210 days per year
- Let for at least 105 days per year
- Fully furnished and marketed as a holiday rental
You can still use the property personally for short stays, one of the major advantages of this type of investment.
If the property is mainly for personal use, you’ll instead need a second-home mortgage, which is structured differently.
How Holiday Let Mortgages Work
Holiday let mortgages can be set up on a repayment or interest-only basis.
Lenders assess affordability primarily on the expected rental income, not just your personal earnings. Because income varies seasonally, lenders “stress test” using projected average occupancy and pricing, typically requiring rental income to cover 125% to 145% of the mortgage payment.
Holiday Let vs Buy-to-Let
Holiday Let | Standard Buy-to-Let |
|---|---|
Short-term stays (days/weeks) | Long-term tenancies (6+ months) |
Higher nightly income potential | More consistent monthly income |
Seasonal demand considerations | More predictable occupancy |
Different tax rules | Mortgage interest relief restrictions apply |
Furnished, sometimes serviced | Unfurnished or part-furnished |
A buy-to-let mortgage cannot be used for holiday letting, lenders see the two as completely different property types and risk profiles.
Tax Considerations
Furnished holiday lets are treated as a trading business, not standard rental property, meaning you may be able to claim:
- Capital allowances on fittings and furnishing
- Business expense deductions
This structure can make holiday lets attractive for investors, though tax advice from a qualified accountant is essential.
Is a Holiday Let a Good Investment?
A holiday home can work well if:
- The location has strong year-round tourism demand
- You plan to use the property for personal breaks as well
- You are prepared for seasonality and management duties
- You have a strategy for cleaning, maintenance and guest support
Popular destinations can deliver high nightly income, but quieter areas may struggle with consistent bookings , due diligence is key.
Deposit & Rates
Typical deposit: 30% – 35% (sometimes 20% with strong profile; sometimes 40%+ requested)
Rates are usually higher than standard buy-to-let products
Affordability assessed on realistic occupancy forecasts, not 52-week rental assumptions
Holiday lets carry more risk for lenders, so the criteria are tighter, especially if the property will be your first investment or you rely heavily on the projected income.
Do You Need a Specialist Broker?
In short: yes, strongly recommended.
Many lenders only accept applications through intermediaries, and holiday-let assessments are more detailed than standard mortgages.
We support you by:
- Identifying lenders who specialise in holiday let finance
- Reviewing rental forecasts & business assumptions
- Making sure affordability and tax structure are correctly positioned
- Managing underwriting and timescales from start to finish
This is a specialist area, getting it right makes a huge difference to profitability and long-term results.
Start Your Holiday Let Journey
Whether you’re looking for a seaside cottage, countryside retreat or city short-stay investment, we’ll help you secure the right structure, lender and rate tailored to your plans.