Holiday let mortgages
A holiday let mortgage is designed for properties you intend to rent out to holidaymakers on a short-term basis. They work differently from standard residential mortgages and buy-to-let mortgages, with their own lending criteria, tax rules, and regulatory requirements. This guide explains what you need to know.
In this guide
What is a holiday let mortgage?
A holiday let mortgage is a specialist product for properties that will be rented out to short-term guests, typically through platforms like Airbnb, Booking.com, or a local letting agent. Unlike a standard buy-to-let, where you have a single tenant on a long-term assured shorthold tenancy, a holiday let involves multiple short stays throughout the year.
Not all lenders offer holiday let mortgages, so the market is more limited than for standard buy-to-let. Interest rates tend to be higher, and deposit requirements are typically 25% or more. However, the potential rental income from a popular holiday area can be significantly higher than a standard long-term let.
Holiday let vs second home mortgage
If you intend to use the property exclusively for personal use, a second home mortgage is appropriate. If you plan to rent it out to paying guests for part of the year, you need a holiday let mortgage. Many buyers want to do both — use the property themselves and rent it out when they’re not there.
Some lenders offer products that allow a mix of personal use and holiday letting, but they’ll want to understand the split. Being honest about your intentions is essential, as using a property commercially on a residential mortgage could breach your mortgage terms.
Affordability and rental income
Holiday let lenders assess affordability based on projected rental income from the property, often requiring evidence from a local letting agent or a holiday letting company. They typically want the projected income to cover 125% to 145% of the mortgage payments at a stress-tested interest rate.
Seasonal variation is a key factor. A property in a popular tourist area might generate strong income during summer months but very little during winter. Lenders will consider the annual average rather than peak income when assessing the deal.
Tax considerations for holiday lets
Holiday lets had favourable tax treatment under the Furnished Holiday Lettings (FHL) rules, which allowed mortgage interest to be deducted as a business expense and provided access to capital gains tax reliefs. However, the FHL tax regime was abolished from April 2025, meaning holiday lets are now taxed in the same way as standard buy-to-let properties.
This change means mortgage interest is now subject to the same 20% tax credit restriction as regular buy-to-let, and capital gains tax business reliefs no longer apply. You should speak to a tax adviser to understand how this affects the financial viability of a holiday let investment.
Get specialist holiday let advice
Holiday let mortgages are a specialist area that requires a broker with experience in this market. At Clearview Mortgage Solutions, we have access to lenders who offer competitive holiday let products and can guide you through the application process.
Contact us for a free, no-obligation chat about your holiday let plans and we’ll help you understand the costs, income potential, and mortgage options available.
Related guides
More guides in our second home mortgage hub.
Speak to an Expert
Our calculators give you a useful estimate, but your actual mortgage and protection options depend on your full circumstances, credit history and lender criteria. Clearview Mortgage Solutions’ FCA regulated—our CeMAP-qualified advisers are on hand to explain how each calculator applies to you and to help you compare real mortgage quotes from 90+ UK lenders.
Get the right mortgage first time
90+ UK lenders · 10,000+ products
Speak to a mortgage adviser today
FCA-authorised, CeMAP-qualified. Free, no-obligation consultation.
Instant comparison from 90+ lenders. No obligation.
Clearview Mortgage Solutions
Get in contact
That's you!
Would recommend
84%
First visit
16%
Higher approval confidence
90+
UK lenders
10,000+
Products
Of our clients get the right mortgage first time
We focus on clear communication, realistic timelines and finding the right product, not just the lowest headline rate.
Get your mortgage quote
Instant comparison from 90+ lenders. No obligation.
Speak to a mortgage adviser today
FCA-authorised, CeMAP-qualified. We'll find the right product for your situation.
Speak to us
Get in contact for expert mortgage advice