A holiday let mortgage is a specialist loan for buying a property you plan to rent out to holidaymakers on short stays. It usually has stricter criteria than a residential or standard buy-to-let mortgage, including a bigger deposit, a rental income projection, and tighter lender checks.

This guide is for people buying a UK holiday let or converting a current property, or for first-time landlords exploring the market.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Holiday let mortgages themselves are not normally regulated by the FCA. 

What is a holiday let mortgage?

A holiday let mortgage, sometimes called a holiday rental mortgage, is for buying a property you'll rent out on a short-term basis, typically with guests staying no longer than 31 days at a time. Lenders usually assess it more like a small business than a standard home loan because income can rise and fall with the seasons.

Holiday let mortgages offered by UK lenders are more limited than standard buy-to-let deals. That means fewer products and stricter criteria.

Holiday let, buy-to-let, second home: What's the difference?

A holiday let mortgage, buy-to-let mortgage, and second home mortgage are built for three different uses. The best fit depends on who'll stay in the property and how the lender expects the loan to be repaid.

An AST, or Assured Shorthold Tenancy, is the standard rental contract used for long-term tenants, normally for at least six months. That's the usual setup for buy-to-let, but not for holiday lets.

A buy-to-let is for long-term tenants. A holiday let is for short stays and seasonal income. A second home mortgage is for a property you keep for your own use, not one you rent out.

If you want a broader starting point first, it helps to look at buy-to-let mortgages.

Who can get a holiday let mortgage?

Most lenders typically look for similar things when assessing a holiday let application, though the specifics vary. The main areas they check:

• A deposit of at least 25%, with some lenders asking for more
• A minimum personal income, often around £20,000 to £40,000
• A rental income projection from a letting agent or estate agent, commonly showing income coverage of around 125% to 145% of mortgage payments
• A suitable property type, because some lenders avoid caravans, holiday park properties, mobile homes, unfurnished properties, or very remote homes.
• A credit history check to assess risk
• Existing home ownership, as many lenders prefer you to already own your main home
• Limits on the number of holiday lets you own, depending on the lender

First-time landlord acceptance varies, with some lenders open to it and others more cautious

For more background, read everything you need to know before you buy to let.

First-time landlords and limited company structures

Some lenders do accept first-time landlords, but the pool is smaller and rates are often less competitive. If you're new to letting, you may need a stronger income, a larger deposit, or a property in a very easy-to-let location.

Buying through a Special Purpose Vehicle (SPV), which is a limited company set up to hold property, can have tax advantages in some cases, but it adds complexity. The right structure depends on your own circumstances, so speak to a qualified tax adviser or accountant before choosing between personal and limited company ownership.

If you are considering that route, compare limited company buy-to-let mortgages.

How much deposit you'll need and how much you can borrow

Many holiday let mortgages need a deposit of 25% to 40%. That means the maximum loan-to-value (LTV) ratio, the percentage of the property's value that you borrow, is usually around 60% to 75%.

Borrowing limits vary a lot by lender, but illustrative loan ceilings are often around £500,000 to £1 million. The amount available to you depends on the rental projection, your personal income, the property type, and the lender's affordability stress tests.

If you want to compare deposit expectations with standard investment property lending, see our buy-to-let deposit guide.

How lenders work out projected rental income

Lenders generally calculate projected rental income in three broad steps. They want to see whether the property can bring in enough income across the year, not just in peak summer weeks.

1. Start with low-, mid-, and high-season weekly rent. A letting agent will typically estimate what the property could earn in different parts of the year.
   
2. Average those figures and multiply by the assumed occupancy. Some lenders may use an assumed occupancy of around 30 weeks per year, though this varies.
   
3. Convert that into a monthly figure and stress-test it. The annual figure is divided by 12, then compared with the expected monthly mortgage payment.
   
   

An example of how lenders estimate holiday let income:

If a lender averages that income and assumes around 30 booked weeks a year, they can build an annual estimate and then a monthly figure. That monthly projection generally needs to cover around 125% to 145% of the mortgage payment, depending on the lender and your tax position.

These figures are illustrative examples only and are not guaranteed borrowing amounts. The amount you may be able to borrow depends on factors including your income, regular spending, credit history, deposit size, and lender affordability checks.

If you want to test a rough scenario first, you can use our buy-to-let mortgage calculator.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Rates and how holiday let mortgages are usually set up

Holiday let mortgage rates are often higher than residential or standard buy-to-let rates because the income is less predictable. Lenders are pricing in the risk of quieter months, possible cancellations, and gaps between bookings.

Interest-only is common because it keeps monthly costs lower, especially in slower months. With an interest-only mortgage, you're not normally repaying the loan balance itself during the mortgage term, so you'll need a separate strategy for repaying the capital at the end.

Many borrowers start with a 2-year or 5-year fixed deal. Tracker deals, where the interest rate moves with the Bank of England base rate, do exist, but your monthly payments can go up as well as down.

Furnished holiday let (FHL) rules: 210, 105 and 31 days

Before April 2025, a Furnished Holiday Let (FHL) was a property let to holidaymakers that met HM Revenue and Customs (HMRC) rules on availability and the length of stays.

Under the old FHL rules, the property generally needed to:

• Be available for letting for at least 210 days a year as a furnished property and marketed commercially
• Actually let for at least 105 days a year on paid commercial bookings
• Avoid stays longer than 31 days, with the same occupant generally limited to 155 days across the year

The property also usually needed to be fully furnished and located in the UK or European Economic Area (EEA). Personal use and discounted stays for friends or family generally did not count toward the letting thresholds.

HMRC abolished the FHL tax classification from 6 April 2025. Mortgage interest relief for former FHL owners is now given as a 20% basic-rate tax credit rather than a deduction from rental income.

Tax rules can change and depend on individual circumstances, so check the latest GOV.UK guidance and speak to a qualified tax adviser before acting. This article isn't tax advice.

Tax to know about as a holiday let owner

Holiday let owners may face several different taxes and property-related charges, depending on how the property is used:

• Stamp duty surcharge: If you're buying a second property, you'll generally pay a higher rate. Read more about the stamp duty surcharge on additional property.
• Income tax on rental profit: Rental income is taxable, and the post-April 2025 rules have changed how mortgage interest relief works.
• Capital Gains Tax: You may owe tax on the profit when you sell.
• Council tax or business rates: Depending on how the property is used and where it is located, it may fall under council tax or business rates instead.

The amount of tax involved can vary depending on the property and how it's used, so it's worth checking the latest HMRC guidance or speaking to a qualified tax adviser.

Holiday let mortgages in Scotland, Wales and Northern Ireland

Holiday let rules and taxes differ across the UK nations, and that can affect affordability as well as the legal setup.

• Scotland has a short-term let licensing scheme. If you want to let a property to visitors, you typically need a licence from your local authority, and letting without a licence can be a criminal offence in some cases. Scotland also uses Land and Buildings Transaction Tax (LBTT), not Stamp Duty Land Tax (SDLT), and applies its own additional dwelling tax rules.
• Wales has its own visitor accommodation registration and tax framework. It uses Land Transaction Tax (LTT), and some local authorities can charge council tax premiums of up to 300% on second homes or holiday lets.
• Northern Ireland follows the SDLT system used in England, but holiday accommodation must be certified by Tourism Northern Ireland before it can be legally let to visitors.

If your property is in Greater London, the 90-day rule also matters. Short lets are usually limited to 90 nights a year unless you have planning permission to use the property differently.

Converting an existing property to a holiday let

You do need to tell your mortgage company if you want to run a holiday let from a property that already has a mortgage. Letting it without permission can breach your mortgage terms.

The next steps depend on how the property is currently owned or financed:

• Residential mortgage: You may need consent to let or a full remortgage onto a holiday let product. Consent to let is usually temporary, and not all lenders allow short-term holiday use through platforms like Airbnb or Booking.com.
• Buy-to-let mortgage: Short-term letting is not automatically allowed. You may need permission or a remortgage onto a holiday let product. If that is your situation, it may help to read about remortgaging or remortgaging a buy-to-let.
• Mortgage-free property: The finance side is simpler, but you may still need licensing, local authority approval, planning permission, or business rates registration, depending on where the property is.

How to apply for a holiday let mortgage

Applying for a holiday let mortgage involves five main steps, from getting a rental projection to lender approval:

1. Work out your budget and target property type. Start with the deposit, likely fees, and the kind of property you want to buy. Location, property type, and how well it suits holidaymakers all affect lender appetite.
   
2. Get a rental income projection. Ask a local letting agent or estate agent for low-, mid-, and high-season rent estimates. Most lenders will want this before they assess affordability.
   
3. Compare lenders or speak to a specialist holiday let mortgage broker. Holiday let lending is niche, so lender criteria can vary more than in the mainstream market. A broker can help you compare deals based on your actual situation.
   
4. Gather your documents. You'll need proof of income, bank statements, ID, property details, and your rental projection letter. If you already own other properties, expect questions about those, too.
   
5. Apply, wait for valuation, then complete. Once your application goes in, the lender will arrange a valuation and review the case in full. Expect the process to take several weeks, especially if the property is unusual or the case is more complex.

If you want help comparing lenders or understanding which products may fit your situation, you can speak to a Habito mortgage adviser to help weigh the options available to you.

Habito is authorised and regulated by the Financial Conduct Authority (FRN 714187).

Your home may be repossessed if you do not keep up repayments on your mortgage.

Risks and things to weigh up before you commit

Holiday lets come with more risks and regulations than many buyers expect:

• Income volatility is the first one. A property can look strong in summer and much weaker in the low season. If you rely too heavily on peak months, cash flow can get tight quickly.
• Running costs are typically higher than for a standard buy-to-let. Cleaning, laundry, utilities, maintenance, marketing, platform fees, and changeover costs all come out of your income, and they add up fast. It helps to look at the real costs of being a landlord.
• Insurance is another extra. Standard home insurance is generally not enough for a holiday let. You may need specialist cover for guest damage, public liability, and loss of rent.
• Tax and regulation can change. The April 2025 FHL changes are a good example of that. Scotland, Wales, Northern Ireland, and some parts of England all have rules that can affect how holiday lets operate.
• Resale risk matters too. Some holiday-let-heavy areas can be harder to exit than mainstream residential locations. Before committing, it's worth asking whether buy-to-let is worth it for your wider plans.

This article is for general information only and isn't personal financial advice.

This article is based on guidance from organisations including MoneyHelper, Citizens Advice, HM Revenue & Customs (HMRC) and GOV.UK. Information is correct to the best of our knowledge at the time of publication but may change. Mortgage rules and legal processes can change, so it's worth checking the latest information or speaking to a qualified adviser.

Frequently asked questions

Quick answers to the questions most readers ask about holiday let mortgages.

Can you get a holiday let mortgage as a first-time landlord?

Yes, you can get a holiday let mortgage as a first-time landlord, but the lender pool is smaller and rates are often less competitive. Some lenders and building societies will consider first-time landlords, especially if you have a strong income, a larger deposit, and a well-located property.

You may face tighter affordability checks than an experienced landlord. Lenders often want reassurance that you can manage the property and cover costs if bookings are quiet.

Can I live in my holiday let?

You can usually stay in your holiday let yourself for a limited number of days each year, but lenders and tax rules often set limits. If you use it too much yourself, the property may no longer meet holiday let criteria or HMRC tests.

Your own stays don't count toward the commercial letting requirement. If personal use is a big priority, a second home mortgage may fit better.

Are holiday let mortgages regulated by the FCA?

Often not. Holiday let mortgages are usually treated as commercial lending, so they're not normally regulated by the FCA in the same way as a standard residential mortgage. 

The broker you use should still be FCA-regulated, though. That matters because regulation of the broker and regulation of the mortgage product are not the same thing.

Can I get a holiday let mortgage for an overseas property?

Generally not through a standard UK holiday let lender. Most UK lenders focus on UK properties, so if you're buying overseas, you'll often need a mortgage in that country or help from a specialist international broker.

The rules, taxes, and legal processes can vary a lot by country. It's best to get local legal and mortgage advice before moving ahead.

How Habito can help with your holiday let mortgage

If you want to explore your options, you can find out what you could be eligible for or chat to a Habito mortgage adviser about your situation and to help compare lenders.

Options available to you will depend on lender criteria, affordability, and your personal circumstances.

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