Holiday Let Mortgage Guide

Holiday Lets, with Zero Broker Fees

Our holiday let guide will tell you everything you need to know about getting a holiday let mortgage, from how to qualify and how affordability is calculated.

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Holiday-Let Mortgage Guide

Author: Darren Ferguson – Mortgage Specialist & Owner

Published: 4th May 2023

Read Time

Read Time – Approximately 8 Minutes

Our Holiday-Let mortgage guide should be helpful, but it’s always best to speak with an adviser to discuss your own personal circumstances and to get the best advice. Call us on 01604 212879 should you have any questions.

What is a Holiday-Let Property?

It’s a property owned to let to holidaymakers in the UK on a short-term let basis, which may be just for a long weekend or extended stays of 1 to 2 weeks.

There are no requirements for a tenancy agreement as there would be with a standard buy-to-let property due to the short-term nature of the letting.


What is a Holiday-Let Mortgage?

It is a mortgage specifically taken out on the basis that the property will be let on a short-term basis, typically advertised through a short-term accommodation site, such as Airbnb, or another holiday let site.

The correct type of mortgage must be taken out for a Holiday Let property, and lenders will have specific Holiday Let products for this type of property.


What is the difference between Serviced Accomodation and a Holiday Let?

There are some key differences between serviced and standard holiday let accommodation, as follows:

  • Serviced accommodation can offer facilities similar to a hotel, with housekeeping, perhaps a concierge service, access to other facilities such as Gyms and Saunas and laundry and cleaning services.
  • Serviced accommodation could also be for business travellers staying for a few nights or perhaps longer.
  • They tend to be apartments rather than holiday-let homes.
  • They can be more costly due to the extra services being provided.

There can be a fine line between serviced accommodation and holiday let properties; not all lenders will lend on a serviced accommodation property. We recommend you call us to discuss your property further.

What is the difference between a Holiday Let mortgage and a standard BTL mortgage?

As stated, the main difference concerns the short-term nature of the Holiday lets. A standard buy-to-let property must have an AST (assured shorthold tenancy) agreement, typically for 6 to 12 months, but this is not required for Holiday Let mortgages.

It’s important to note that you should never use a standard buy-to-let mortgage when financing a Holiday Let or Serviced Accommodation property. Buy-to-let mortgages will have strict terms and conditions stating that the property must be let for a minimum of 6 months under an AST agreement, which will not be the case for either of the above scenarios. Breaching these terms and conditions could result in your mortgage being called in by the lender. You may ask how the lender will know, but lenders can and often will do address searches on buy-to-let properties to see how and where they are advertised.

The other difference is how affordability and loan amounts are calculated, which we’ll discuss further below.

How is affordability calculated for a Holiday-Let Mortgage?

To calculate the loan amount, the lender will either work off projected holiday let income in the case of a start-up business or work off trading accounts for an established holiday let business.

Start Up Holiday Let

Start Up Holiday Let

Lenders will have no income to assess as a start-up business, so projections must be obtained.

At the application stage, lenders will typically ask for a projection from a recognised holiday letting site that details the expected weekly holiday let income for the following:

  • Low Season
  • Mid Season
  • High Season

Lenders will then typically take an average of the three and multiply this over a period of weeks, which will vary from lender to lender but will start at around 30 weeks, for example:

  • Low season average p/week – £600
  • Mid Season average p/week – £750
  • High Season average p/week – £900

The average of the 3 is £750, multiplied by 30 weeks gives a projected annual rental income of £22,500. This is the figure the lender will use to calculate the loan amount, with the actual calculation in terms of multiples varying from lender to lender.


Existing Holiday Let

Lenders will typically want to see trading accounts for existing businesses that are remortgaging.

Affordability can also be based on rent receipts or bank statements evidencing rental income over 12 months, and 100% of the rental income can be considered.

With some lenders, it is also possible that personal earned income from employment can also be taken into account to help support any potential borrowing.

Rental vs Holiday Let Income

Rental Income vs Holiday Let Income

It’s important to note that not all Holiday Let lenders will base affordability on the Holiday let income.

Some may calculate affordability based on what the property would achieve in rental income if it were to be let as a standard buy-to-let property. They do so because they want the security of knowing that if the property does not work out as a holiday let, it could be let on a standard rental basis, and the rental will still be sufficient to service the required loan amount.

As rental income from a standard buy-to-let income will typically be less, this could impact how much you could borrow, so choosing the right lender is important.

Affordability Calculations

Lenders will calculate affordability for a holiday-let property much the same as they would for a buy-to-let property. Once they have established the projected or actual annual rental income, they will apply a calculation roughly in line with the following (this will vary slightly from lender to lender)

Buying In Personal Name:

A minimum rental coverage of 145% (mortgage interest payment) based on the initial pay rate plus 2%, or 5.5%, whichever is greater.

Buying In Limited Company Name:

A minimum rental coverage of 125% (mortgage interest payment) based on the initial pay rate plus 2%, or 5.5%, whichever is greater.

As an example, using an annual projected holiday let income of £25,000 per annum and using the nominal rate of 5.5%, the following loan amounts would be achieved (subject to LTV restrictions)

Personal name – £313,480 (£25,000 / 1.45 / 5.5%)*

Limited Company – £363,636 £25,000 / 1.25 / 5.5%)*

*the above are for illustrative purposes only and amounts will vary from lender to lender, and what products are on offer. 

Who can apply for a Holiday Let Mortgage?

The following can apply for a Holiday Let Mortgage:

  • Individuals, either on your own or with up to 3 others
  • Limited Companies (Both SPVs and Trading Businesses)
  • Partnerships
  • Trusts

With some lenders, applying for a holiday let mortgage as a first-time buyer is also possible, with no requirement to be an existing homeowner. Most lenders will require applicants to be aged 21 or over.

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What are the eligibility requirements for a Holiday Let Mortgage?

Deposit for a Holiday Let

Most lenders will require a deposit of 25% to 40% of the property value, which will typically need to be funded from the applicant’s own funds, e.g. savings. However, a gifted deposit from immediate family members can also be acceptable, subject to confirming the gift is not expected to be paid back.

Should the deposit be an issue, it is also possible for some lenders to use other properties as additional security, with the lender taking a charge against both. This will be subject to the available equity within the other property, which typically needs to be 50% or more after considering any existing mortgage borrowing.

Income & Employment

This will vary from lender to lender, with some lenders having minimum personal income requirements and others not.

Both employed and self-employed applicants can be considered, with self-employed applicants requiring a minimum of 12 months of self-employment, but again there are exceptions to this with specific specialist lenders, albeit with less favourable terms.

Be an Existing Homeowner

Most Holiday Let lenders will require applicants to be either existing residential homeowners or own other Holiday let or buy-to-let properties.

There are a couple of exceptions to this, so please call us to discuss.

Expert Holiday Let Mortgage Advice

We’ll search the market to find the best Holiday Let Mortgages from the UKs leading lenders

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How To Apply

Its simple to apply, just call us on:

01604 212879 and we’ll handle everything for you.


Let’s talk you

It’s not just about the property. You’ll need to meet specific criteria, so it’s important we understand a little about your background to make sure we find the best option for you. Time spent at the front end is time saved at the back end!

Let’s talk property

We’ll need to know all about the property, such as value, type, location, income and ultimately, your plans. The more we know, the better, and we’ll guide you through what we need to know.

Let’s talk options

Time to piece it all together and talk about your options. We’re firmLets get movin believers in straight talking, so we’ll tell you what can and can’t be done and present you with options best suited to your requirements.


Let’s get moving

If you’re happy with the options discussed, it’s time to get things moving and get an agreement in principle. We’ll handle everything and support you along the way to help ensure your application is as smooth as possible.

Should I buy a Holiday Let in Personal Name or Limited Company?

This depends on your situation, and it’s important to speak to a qualified accountant to understand your best course of action. It is important, however, to note that not all lenders will lend to a limited company for holiday let purposes. Therefore, buying in a limited company could restrict your options.

Applicant Type

Personal Name

All lenders will lend to an individual or individuals up to a maximum of 4 applicants.

Many borrowers will want to buy in a Limited Company, as, like a standard buy-to-let mortgage, they want to be able to offset any mortgage interest due.

However, furnished holiday lets are treated differently than standard buy-to-let properties and can obtain 100% mortgage interest relief.

Therefore, buying in a personal name can be advantageous. For an individual who is a basic rate taxpayer with just one property, buying in your personal name will likely be more tax-efficient and cost-effective, but everyone’s circumstances are different, so specific tax advice should be sought before deciding how to buy.

HMO Deposit

Limited Company

Some Holiday Let lenders will not lend to a limited company for Holiday let purposes.

Those that do may only lend to a special purpose vehicle (SPV) and not to a business with other trading activities.

There are tax advantages to buying in a limited company, particularly for higher-rate taxpayers. We recommend speaking to a qualified accountant to ascertain the best route might be for you.


HMRC Furnished Holiday Let Rules

There are specific guidelines that HMRC set out for a property to qualify as a furnished holiday let.

Some of the main rules are as follows, but we recommend visiting HMRC Furnished Holiday Let Guidance for more details.


  • The property must be available for letting as a furnished holiday let for a minimum of 210 days in the year.
  •  The property must be let to paying guests for at least 105 days in the year, out of the 210 it was available.

Multi-Unit Holiday Let Mortgages

Typically holiday let lenders will only look to mortgage a single property, but there are often scenarios where landlords wish to purchase multiple holiday let units on the same title.

The options are a little more restrictive, but there are still lenders that are happy to do so.

Call us to see how we can help.


Find out more about buy-to-let stress tests

Work out how much you can borrow with our buy-to-let mortgage calculators

Learn more about purchasing a property in a limited company

Read about arranging your mortgage on an interest-only basis

Find out about HMO Mortgages



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Frequently Asked Questions

Can I use a Holiday Let mortgage to buy a property abroad?

Our Holiday Let lenders will only lend against holiday properties in the UK. 

Can I let out my Holiday Let property on short term letting sites such as Airbnb?

Yes, you can. Most lenders are happy to accept properties let through Airbnb and other sites such as

How long can I take out a Holiday Let mortgage for?

Standard mortgage terms are available of up to 25 years and more with some lenders. 

Do I need to have experience of letting holiday properties to get a holiday let mortgage?

No, several lenders are happy to lend to first-time landlords. Most lenders will require you to be a homeowner, but there are some exceptions to this.

What happens if I can't find tenants for my holiday let property?

It’s important you do your research before entering into any holiday let purchase to ensure there is suitable demand for your property in your chosen location. 

If the property does not work as a Holiday Let, it’s possible with some lenders to let it as a standard buy-to-let. Call us to discuss this further. 

How can I find the best holiday let mortgage for me?

Call us. As a specialist mortgage broker we have extensive knowledge of the UK Holiday Let sector and where to find the best mortgage deals. 

Can I get a holiday let mortgage if I already have a residential mortgage?

Yes, as long as the intention is not to primarily use the property as a 2nd home or holiday home for your own purposes. 

Holiday let lenders typically allow you to occupy the property for up to 90 days maximum, but any more than that, and you would be in breach of their terms and conditions. If the intention is to use it as a 2nd home, then a residential mortgage would be the best route. Call us to discuss if this is the case.

Can I convert my existing buy-to-let property to a Holiday Let property?

If your property is mortgaged, then you’ll need to speak to your existing lender to seek permission. If they don’t offer Holiday Let mortgages then it’s likely you’ll need to refinance the property to another lender. 

Thanks for reading our Holiday-Let Mortgage Guide!