What Is a Holiday Let Mortgage?

A holiday let mortgage is for properties rented as short-term holiday accommodation (Airbnb, holiday cottages, etc.) rather than long-term tenancies. They require 25-40% deposit and income is calculated based on projected weekly rates and occupancy. Holiday lets may qualify as Furnished Holiday Lets for tax purposes, offering benefits like full mortgage interest relief and capital allowances that standard BTL doesn't receive.

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What is a holiday let mortgage?

A holiday let mortgage is specifically for properties that will be rented out as short-term holiday accommodation rather than long-term residential tenancies. They're used for holiday cottages, Airbnb properties, and similar short-term rental investments. Criteria and rates differ from standard buy-to-let mortgages.

Can I use Airbnb with a standard mortgage?

Usually no. Standard residential mortgages typically prohibit commercial letting, and standard BTL mortgages are designed for long-term tenancies. You need either a holiday let mortgage or explicit consent from your lender. Using Airbnb without permission could breach your mortgage terms.

What deposit do I need for a holiday let mortgage?

Most holiday let mortgages require 25-40% deposit - higher than standard BTL (typically 25%). The larger deposit requirement reflects the perceived higher risk from variable seasonal income and potentially higher property wear. Some lenders accept 25%, while others require 30-35%.

How is holiday let income calculated for a mortgage?

Lenders typically take projected weekly rental rates multiplied by expected occupancy (often 30-40 weeks per year). Some lenders use independent letting agent projections. The rental coverage ratio (typically 125-145% at stressed rates) must be met, similar to standard BTL.

What are the tax benefits of holiday lets?

Furnished Holiday Lets (FHLs) qualifying under HMRC rules receive tax advantages: full mortgage interest relief (unlike residential BTL), capital allowances on furniture/equipment, potential for CGT entrepreneurs' relief, and pension contribution eligibility. The property must meet occupancy and availability tests.

Can I use my holiday let myself?

Yes, personal use is usually permitted, which is an advantage over standard BTL. However, for FHL tax benefits, there are limits - personal use can't exceed 31 days. Lenders generally don't restrict personal use but expect the property to be primarily income-generating.

Quick Answer

How Do Holiday Let Mortgages Work?

Last reviewed: December 2025

Reviewed by Jay Sabine – CeMAP Qualified – 29 years experience

Specialist mortgages for short-term rental properties. 25-40% deposit required. Income assessed on projected occupancy. Tax advantages available for qualifying properties.

Holiday let mortgages are specialist products designed for properties that will be let to holidaymakers on a short-term basis rather than long-term tenants. They differ from standard buy-to-let mortgages in several ways: income is calculated using projected weekly rates and estimated occupancy rather than a single monthly rent, deposits are typically higher (25-40% vs 25% for BTL), and lenders assess the property's holiday rental potential based on location and local market. The major advantage is that qualifying Furnished Holiday Lets receive significant tax benefits not available to standard BTL landlords, including full mortgage interest relief and capital allowances on furnishings.

Your property may be repossessed if you do not keep up repayments on your mortgage. Holiday rental income is seasonal and not guaranteed.

Key Points

1Specialist product for short-term holiday rentals
225-40% deposit typically required
3Income based on weekly rates x occupancy
4Personal use allowed (with limits for tax benefits)
5FHL tax status offers mortgage interest relief
6Location and holiday appeal assessed by lenders

Eligibility Criteria

Property suitable for holiday letting (location, facilities)
Minimum 25% deposit (often 30-35%)
Projected rental income meets coverage requirements
Good credit history
Some lenders require holiday letting experience

Typical Timeframe

Holiday let mortgage applications take 4-8 weeks, similar to standard BTL. Lenders may require projected income from a letting agent. For FHL tax status, the property must be available for letting 210+ days per year and actually let 105+ days.

Next Steps

1Research holiday rental demand in target area
2Get rental projections from local letting agents
3Calculate deposit requirement (25-40%)
4Understand FHL tax rules and benefits
5Speak to a specialist BTL broker

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How Do Holiday Let Mortgages Work?

Key Points

Eligibility Criteria

Typical Timeframe

Next Steps

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