Published 1 October 2013 · Older article — see current rates
What this article covers
Right — if you’ve fallen for a cottage in Cornwall or a flat by the coast and you’re planning to let it out to holidaymakers, here’s the thing about holiday let mortgages: they are their own animal. Not a residential mortgage, not quite a standard buy-to-let either. The cases that run into difficulty usually do so for the same handful of reasons. So let me walk you through how lenders actually look at these, where people trip up, and which parts of a case tend to be the awkward ones.
In short
A holiday let mortgage is a specialist buy-to-let product for a property let on a short-term, furnished basis to holidaymakers. Lenders may assess it on projected seasonal rental income — usually low, mid and high-season figures — rather than a single monthly rent, and the criteria are tighter than standard buy-to-let.
What is a holiday let mortgage and how is it different?
A holiday let mortgage is designed for a property you let out short-term to paying guests — a week here, a long weekend there — rather than to one tenant on a 12-month assured shorthold tenancy. That sounds like a small distinction. It isn’t. It changes how the lender underwrites the whole thing.
What does this mean? Basically, with a standard buy-to-let the lender sees one tenant, one rent, one figure they can stress-test. With a holiday let, the income arrives in lumps — busy in August, quiet in February — and the lender has to take a view on a property that might be empty for weeks at a time. That extra uncertainty is why this sits in specialist territory, why the panel of lenders who’ll touch it is smaller, and why some lenders steer clear altogether.
Here’s the code-switch that matters. What you experience is a lovely bolthole that pays for itself in the school holidays. What the lender sees is a seasonal business with variable cash flow secured against bricks and mortar. Our job as advisers is to translate the first into something the second is comfortable lending against — and that translation is most of the value we add.
We see a lot of buyers assume their high-street bank will just do it. Generally they won’t. This is a niche product, and you usually need a specialist lender to get it over the line.
How do lenders assess holiday let income?
This is the big one, so I’m giving it its own section.
With buy-to-let, the lender takes the expected monthly rent and stress-tests it. With a holiday let, they can’t do that — the income isn’t one flat number. So most lenders ask for a projected income assessment, typically across three seasons: low, mid and high. Some want this confirmed in writing by a holiday letting agent who knows the local market; others will accept a reasoned projection.
What they’re really doing is working out a blended, conservative annual figure and making sure it covers the mortgage comfortably even allowing for void weeks. In most cases they apply a buffer, because they know not every week of the year will be booked.
When someone comes to us about a holiday let, one of the first things I ask for is an indication of the rent in the high season, the medium season and the low season. A local letting agent can often split the expected income further, for example across school holidays and short breaks. The rental calculation is worked out from those seasonal figures, and each lender has its own rules for doing it.
From the enquiries I have dealt with, the rental calculation is the most common reason a holiday let plan does not go ahead. People see the headlines, look into it, and then find they cannot make it work on the borrowing or the deposit they had in mind. A product being on the market does not mean a lender will lend to you, so it is worth working the seasonal figures through against the lending criteria before you commit to a purchase, not after.
A lot of the lenders active in holiday lets have traditionally been building societies rather than the big high-street banks. In my experience they tend to be more conservative on the rental calculation and a little more demanding on criteria. A single monthly rent keyed into an automated system does not show how a holiday let earns through the year, which is why these applications usually need an underwriter to look at them.
Check how a lender works out the income, not just whether its criteria say it does holiday lets. When I looked at this in 2023, many lenders would say they allowed short-term letting but ran the rental calculation as if the property were on a normal assured shorthold tenancy, which ignores the higher income you are buying it for. More specialist lenders work from the low, medium or high season figures, or their own short-term calculation, which generally supports more borrowing than the standard tenancy basis. If you need a higher loan to value, or the case has more quirks, the standard tenancy route can still be the one that works. A lot of lenders also want a holiday let to be somewhere people genuinely go on holiday, and want to see that it will let at the income you say it will.
The valuation can catch people out too. One problem I have seen is the surveyor looking at the property as a plain buy-to-let and giving rental figures that do not reflect holiday letting. I have seen surveyors put the conventional buy-to-let rent well below what the same property can achieve as a holiday let, although the net gap is smaller once you account for the higher management and advertising costs. That is why I suggest gathering evidence of the achievable income, such as quotes from local letting agents, before you apply.
Underwriters also look more closely at you, not only at the property. A holiday let can have a rainy summer, a bad season or floods, and lenders have long worried that income from the peak season will be spent rather than held back for the quieter months. So they want to understand where your funds are coming from, why you are going into holiday letting, and whether you have the savings or earnings to keep paying the mortgage if a season does not go to plan.
Some lender rules only show up in the detail. In the past I have come across lenders that would not lend on a property in a holiday park, and one that offered a lower loan to value on a leasehold holiday let than on a freehold one, even where the lease was very long. A cottage can still be leasehold, so check the tenure early. These were individual lenders’ rules at the time and need checking against current criteria for your case.
What lenders will want to see
Before we approach a lender, we like to have the file straight. Get these lined up and your case moves a lot faster:
- A realistic seasonal income projection — low, mid and high season, ideally backed by a local holiday letting agent rather than the headline figure from a listings site.
- The property’s suitability for short-term letting — location, condition, whether it’s genuinely a holiday destination. A flat above a parade of shops in a commuter town is a harder sell than a coastal cottage.
- Your wider income and circumstances — many lenders want to see you have personal income behind the deal, not just the projected rent, especially for a first holiday let.
- Your experience as a landlord — some lenders prefer applicants who already own a buy-to-let or another property; first-time landlords can be considered but the panel narrows.
- How the property is held — personally or through a limited company / SPV. This affects which lenders will consider you and how the case is structured.
- Any planning or use restrictions — some properties carry conditions that limit short-term letting or holiday use. Flag these early; lenders certainly will.
- Furnished and ready to let — a holiday let is, by definition, furnished. Lenders expect the property to be set up for guests.
The earlier we know about anything unusual — a quirky construction, a restriction on the title, a thin income — the better we can choose the right home for the case first time, rather than getting a decline and starting again.
Holiday let vs buy-to-let vs second home: which is which?
People muddle these three constantly, and the wrong label leads to the wrong product. Here’s a quick decision table.
| If you… | You probably need | Key feature |
|---|---|---|
| Let to holidaymakers short-term, furnished, and don’t live there | A holiday let mortgage | Income assessed on seasonal projections |
| Let to one tenant on a long tenancy | A buy-to-let mortgage | Income assessed on a single monthly rent |
| Buy a bolthole for your own use and don’t let it out | A second home / residential mortgage | Assessed mainly on your personal income |
| Let your own home occasionally on Airbnb | Often needs lender consent or a specialist product | Depends on how often and how it’s used |
The grey area is the last row — the “I’ll just Airbnb my spare place sometimes” plan. If the property is genuinely run as a short-term holiday let, a standard residential or even standard buy-to-let mortgage may not be the right basis, and letting on the wrong product can breach your mortgage terms. If you’re not sure which box you’re in, that’s exactly the kind of thing to run past us before you commit.
What about furnished holiday let (FHL) tax rules?
The separate furnished holiday lettings tax regime was abolished in April 2025. From the 2025 to 2026 tax year, income from short-term holiday accommodation is taxed under the usual property-income rules. Your own position still needs advice from a qualified accountant or tax specialist.
We’re mortgage advisers, not tax advisers, so I’ll be straight with you: we’ll help you get the right mortgage, but for the tax side you should speak to a qualified accountant or tax specialist. What I’d flag is that how the property is taxed and how it’s held can interact with which lender suits you — so it’s worth getting the mortgage and tax thinking joined up early rather than discovering a clash later.
Can I get a holiday let mortgage as a first-time landlord?
Yes, in many cases — but let’s be honest about it. The panel of lenders comfortable with a first-time landlord buying their first holiday let is narrower than for an experienced portfolio landlord. Some lenders want you to already own property, or to have a certain level of personal income, or both.
That doesn’t mean it can’t be done. It means matching you to a lender whose criteria you actually fit, rather than firing your application at one that was always going to say no. This is where having someone who knows the appetite of each lender saves you a wasted credit search and a few weeks. The trick is knowing which door to knock on.
When someone wants to invest in a first buy-to-let, one of the first things I look at is where they sit: whether they only have a residential mortgage, whether they live with family and are looking to invest, or whether they already have buy-to-lets. It is not the end of the world if you are a first-time buyer trying to be a landlord, and there can be options, but you need to understand where you sit before looking at mortgage options, because those options are based on your fundamentals.
When I answered first buy-to-let questions back in 2021, one point that caught people out was that if you owned a property years ago but do not own a residential property right now, lenders treated you as a first-time buyer and first-time landlord, and that comes with its own set of problems.
In our view the same starting point makes sense for a first holiday let.
If your situation is more buy-to-let than holiday let, our buy-to-let mortgages page covers that route in more detail.
How does the process work, start to finish?
Here’s the rough running order for a typical holiday let case:
- A proper conversation — we go through the property, your income, how you’ll hold it, and what you’re trying to achieve.
- Income projection — you (or a local letting agent) put together the seasonal figures so we’ve got something credible to present.
- Lender matching — we identify the lenders whose criteria fit your case, rather than the ones with the loudest adverts.
- Decision in principle — we get an early indication so you can offer with confidence.
- Full application and valuation — the lender assesses the property and the projected income.
- Offer and completion — once the lender’s happy, you move to completion and the keys are yours.
If you’re buying at auction or the property needs work before it’s lettable, the timeline and the funding route can look different — sometimes a short-term option bridges the gap before a holiday let mortgage is put in place. Our mortgage calculator and our guide to what bridging loans are are worth a look if that’s your situation, and if it’s your own home involved, regulated bridging loans explained sets out where that line falls.
Frequently asked questions
Are holiday let mortgages harder to get than buy-to-let?
Generally they sit in more specialist territory, because the income is seasonal and the lender panel is smaller. They’re very much obtainable — you usually just need a specialist lender and a credible income projection rather than your everyday high-street bank.
Can I live in my holiday let myself?
Some lenders allow a limited amount of personal use, others don’t. It varies, so it’s a criteria point we check up front — using the property yourself outside what the lender permits can cause problems, so it’s worth getting clear before you apply.
Do I need a special mortgage to let on Airbnb?
If you’re running a property as a genuine short-term holiday let, yes — letting on a standard residential or standard buy-to-let mortgage without the right permission can breach your terms. The right product depends on how often and how the property is let.
Can I buy a holiday let through a limited company?
In many cases, yes. How you hold the property affects which lenders will consider you and how the case is structured, so it’s a decision worth taking advice on — ideally alongside your accountant.
How much deposit do I need for a holiday let?
Deposit requirements vary by lender and by case, and tend to be assessed alongside the projected rental income. Rather than quote a figure, we’d look at your specific situation and tell you what’s realistic for the lenders you actually qualify with.
Can first-time landlords get a holiday let mortgage?
Yes, though the choice of lenders is narrower. The key is matching you to a lender whose criteria you fit.
Tell us about your holiday let — we’ll tell you where it can be placed
Here’s the deal. Send us the basics of your holiday let — where it is, the kind of property, roughly how you expect it to let across the seasons, and how you plan to hold it — and we’ll tell you the realistic next step: which type of lender fits, what they’ll want to see, and whether your case stacks up before you spend a penny on a valuation. We’d rather have the honest conversation with you early than watch you offer on the wrong basis.
Speak to a specialist mortgage adviser today.
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Related guides & tools
Sources
- GOV.UK – Letting out a self-catering holiday home in England. https://www.gov.uk/guidance/letting-out-a-self-catering-holiday-home-in-england-rules-and-regulations
- HMRC – Furnished holiday lettings tax regime abolition. https://www.gov.uk/government/publications/furnished-holiday-lettings-tax-regime-abolition
- FCA Handbook – Mortgages and Home Finance: Conduct of Business Sourcebook. https://www.handbook.fca.org.uk/handbook/MCOB/
- FCA Financial Services Register – Niche Advice Limited, FRN 750263. https://register.fca.org.uk/