Holiday let mortgages

What is a holiday let mortgage?

A holiday let mortgage is a loan for a property you plan to rent out to holidaymakers on a short-term basis, rather than live in yourself or rent out long-term.

 It's different from a second home mortgage, which is for a property you'll use yourself rather than let out.

As holiday homes are let on a short-term basis, you can't buy a holiday home using a buy-to-let mortgage, as these assume the property is let using an assured shorthold tenancy of at least 6 months to a year.

And although you may be able to make more money overall with a holiday home, the income fluctuates. This means the rental income you'll get, which is needed to work out how much you can borrow, is worked out differently.

You can't use a residential mortgage to buy a holiday let either, as these don't usually allow you to let the property.

Holiday let mortgages are for properties in the UK. To buy a property abroad, you'll need an overseas mortgage.

How much deposit do you need for a holiday let mortgage?

For a holiday let mortgage, you typically need a deposit of at least 25% of the property’s value, meaning you can usually borrow up to 75% LTV (loan-to-value).

This is higher than a standard buy-to-let mortgage, where you might be able to borrow up to 80% LTV. Lenders require a larger deposit because holiday lets are considered higher risk due to fluctuating rental income and seasonal demand.

Holiday let mortgage criteria

The lending criteria for a holiday let mortgage is often stricture and other criteria that may apply include:

• Minimum and maximum loan amounts, often between £40,000 and £1 million, depending on the lender.

• Minimum personal income, separate from rental income, such as £25,000 for one applicant or £30,000 jointly, with higher thresholds for larger loans or cheaper deals.

• Maximum borrowing age or mortgage term, typically up to 85.

• Expected rental income of 125–145% of mortgage interest (calculated at a higher rate than you pay) to ensure affordability if rates rise.

• Limits on how long you can stay in the property each year, often 2–3 months.

• Maximum portfolio size if you own multiple rental properties.

Additional requirements

Holiday let mortgages are often available for multi-unit properties, like block or flats, and for new landlords. You can also hold the property through a limited company for potential tax benefits, though interest rates may be higher. These mortgages usually allow letting through platforms like Airbnb.

You probably won’t be able to get a mortgage to buy a temporary or moveable structure such as a mobile home.

As part of your application, the lender will also look at your income and outgoings, including any other mortgage you have. It will verify that you can afford to pay back the mortgage and cover the repayments even when your holiday let is empty. You’ll need to show at least two years of accounts if you’re self-employed.

As with buy-to-let loans, mortgages for holiday lets are usually taken out on an interest-only basis.

How much does it cost to have a holiday let?

Holiday let mortgage costs will vary depending on the size of the property, its condition and where it’s located. 

Bear in mind that there may be extra costs involved with holiday lets compared to buy-to-let properties. Holiday lets are usually furnished, which is an initial and potentially ongoing cost. You will have to pay the utility bills and for cleaning between each guest unless you do it yourself.

Are holiday let mortgages more expensive?

Yes, holiday let mortgages are generally more expensive than standard buy-to-let mortgages. Lenders view holiday lets as higher risk because how much of the year your property will be let is uncertain.

You might earn well during peak season but very little during quieter months, so you must be able to cover mortgage payments even when rental income drops. Local tourism declines can also reduce income, adding to the risk.

Managing a holiday let is more time-consuming than a regular rental. You’ll need to handle multiple bookings, enquiries, and guest needs, while also keeping your property visible online through effective advertising. These factors contribute to higher interest rates and stricter lending criteria compared with standard buy-to-let mortgages.

Holiday let mortgage rates

You'll find both fixed and discounted variable rate deals, usually over a 2 or 5-year initial period. As of July 2026, rates typically start from around 5.5% and can go above 6.5% depending on the lender and how much you're borrowing against the property's value. The lower the maximum LTV you need, the less you'll usually pay, and fixed rates usually cost more than discounted rates, but they give you certainty about how much your repayments will be each month.

Make sure you look at the total cost over the initial deal period, including any set-up fees, rather than just the interest rate when you're comparing deals. A low interest rate doesn't necessarily mean it's the cheapest overall.

What's changed with holiday let tax rules?

Since 6 April 2025, the furnished holiday let (FHL) tax regime has been abolished, so holiday lets are now taxed more like standard buy-to-lets.

Before this change, you could deduct your full mortgage interest from your rental income before working out your tax bill. Now, individual owners get a tax credit worth 20% of their mortgage interest instead, which usually means a bigger tax bill if you're a higher or additional rate taxpayer.

This is worth factoring into your budget when working out whether a holiday let makes financial sense for you. Speak to an accountant for advice on how this affects your specific situation, as we can't give financial or tax advice.

Where can I find a holiday let mortgage?

The lenders offering holiday let mortgages tend to be smaller building societies rather than big banks and building societies, and there is a limited number. You may find them at the following lenders:

• Bath Building Society

• Cumberland Building Society

• Furness Building Society

• Hodge Bank

• Ipswich Building Society

• Leeds Building Society

• Monmouthshire Building Society

• Principality Building Society

• Scottish Building Society

• Teachers Building Society

• Vernon Building Society

How to find the best holiday let mortgages

To find the best holiday let mortgage, it’s a good idea to speak to a specialist mortgage broker as they will be able to look at all available products to find the ones that suit your needs. They will know which lenders are likely to lend to you, and can help you compare the true cost of deals. If you have an unusual situation or a poor credit history, they can make it easier to get a mortgage and handle the application process for you.

As with regular buy-to-let loans, the Financial Conduct Authority does not regulate holiday let mortgages, so if you go direct to a lender, it won’t give you any advice about the suitability of the mortgage you want to take out. However, mortgage brokers do have to be regulated, so you’ll be able to claim compensation if they give you poor advice.

Are there any alternatives to a holiday let mortgage?

Other ways to finance buying a holiday let include remortgaging your home to release the equity to buy it. However, you won’t then be able to offset your finance costs against your rental profits before paying income tax. Alternatively, if you have most of the money, you can take out a personal loan to make up the shortfall. These are usually available up to £25,000 and can be taken out over one to seven years.