Holiday Let Mortgage FAQs for 2026

Sometimes all you need is an efficient, short, to-the-point answer. Here are the most frequent questions asked about holiday let mortgages through 2025, along with brief plain English answers. If you’d like more detail about anything mentioned in this post you can either contact us or explore our blog, which is full of interesting and useful insights about holiday let loans, tax, the regulatory landscape and more.

Holiday let mortgage basics

What is a holiday let mortgage?

A holiday let mortgage is a special type of mortgage designed for properties rented short-term to holidaymakers.

How is it different from a buy-to-let mortgage?

Holiday let mortgages are meant to fund properties let for short term stays with some occasional personal use, while buy-to-let mortgages are designed for long-term tenants using the property as their primary residence.

Can I use a standard buy-to-let mortgage for a holiday let?

In short, no. Most mortgage lenders don’t allow short-term and holiday rentals on a buy-to-let mortgage, simply because the risks involved are so different.

Do I need experience as a landlord?

Not always. It obviously helps if you already know what’s what, but plenty of lenders accept first-time landlords. We all have to start somewhere!

Can first-time buyers get a holiday let mortgage?

Some lenders offer first time buyer holiday let loans, but the criteria can be stricter than they are for people who already own property, simply because they’re more of a known quantity as far as repayments are concerned.

Can I stay in the property part of the year?

Holiday lets should be used primarily for fee paying guests, but most lenders allow up to 90 days per year of personal owner usage.

Holiday cottage mortgage deposits, rates and affordability

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

You’ll probably need to provide at least 25% of the value of the property as a deposit. Some lenders offer mortgages with 20% deposit, but only a few.

Are holiday let mortgage interest rates higher than buy-to-let mortgages?

Historically, yes, because lenders perceive slightly more risk, but these days they are very similar.

How do lenders assess affordability?

They tend to focus on the gross rental income you expect to earn, often supported by your own personal earned income which should be around £25,000 or above.

Do lenders use projected holiday rental income?

Yes. They will often base their decision on a professional letting forecast provided by a recognised holiday let agency.

Holiday cottage mortgage properties and location

What types of property are acceptable?

Lenders tend to prefer regular residential style houses and flats in areas holidaymakers love. If the property is unusual, for example built using non-standard materials like wood, they might think twice.

Are coastal or rural properties harder to mortgage?

Many lenders prefer to lend on properties in areas where people take holidays, because it’s more likely the property will earn a good income. Coastal and rural homes are a good bet. If the property is very remote (think somewhere miles from anyway in Scotland), then there may be some issues.

Do new-builds or leasehold properties qualify?

Yes, but they can come with tighter lending criteria or larger deposits. New builds must have a recognised 10 year structural warranty and leases must have at least 85 years left and have reasonable service charges and ground rents.

Are there minimum occupancy requirements?

Not as such. This is really covered by the rental income assessment where the lenders look for a certain number of rental weeks per year, so they can be confident you’ll be able to afford the mortgage repayments.

Does the property need to be available year-round?

Usually yes, lenders prefer to see no restrictions on holiday lets so revenue can be maximised.

Holiday cottage personal use and letting flexibility

How often can I use the property myself?

You can usually stay in your own holiday home for a up to 90 days each year. The maximum amount of owner-use days is set by your mortgage lender and varies by lender.

Can friends and family stay for free?

As long as the time you spend in your holiday home doesn’t exceed your personal use limit you and your family can stay there for free – that’s your personal choice.

Can I switch the property to a long-term let later?

If you have a holiday let mortgage, then normally you will need to remortgage to a buy to let mortgage before you make such a switch. Some lenders allow the holiday let mortgage to remain in place for both activity types, but the rates tend to be higher.

Tax and Furnished Holiday Let (FHL) Rules

What qualifies as a Furnished Holiday Let or FHL?

Technically, the concept of an FHL was abolished in April 2025. Many parties still refer to the old rules for reference, but the FHL regime is no longer recognised by HMRC.

Are holiday lets more tax-efficient than buy-to-lets?

They can be, and they often are, but it depends on your specific circumstances. Following the last set of policy changes, holiday lets and buy to let tax treatment are more closely aligned.

Can I still claim mortgage interest relief?

No, this has been abolished.

What are the capital gains tax rules when selling a holiday let?

Holiday lets are no longer treated separately by HMRC. They are treated in the same way as other additional property, subject to 24% capital gains tax.

Do I need to register for business rates instead of council tax?

Probably, if the property is going to be available to the public for most of the year. You need to contact your local council and valuation office to check.

Holiday cottage planning, licensing and regulation

Do I need planning permission for a holiday let?

Not usually, but councils in some areas like Wales and Scotland require it. Some councils in England are also moving towards this situation by enforcing something known as the Article 4 Direction. You should check with the local council.

Are there local council restrictions or licensing schemes?

Yes, especially in popular tourist areas like London. We recommend you check before making a decision.

How do short-term letting rules affect mortgages?

Lenders simply expect the property to comply with local rules and regulations, like any other home.

What happens if regulations change after I buy?

Your lender might decide to review their terms in which case, unless you’re told otherwise, you’ll need to abide by them.

Holiday cottage insurance, letting and management

What insurance is required for a holiday let?

Whilst it’s not compulsory, you will probably want to look at specialist holiday let insurance that covers specific holiday let risks like loss of rental income, or damage by guests. Ordinary home and contents insurance doesn’t cover holiday lets because the risks involved are so different.

Is standard buy to let landlord insurance sufficient?

Ordinary landlord insurance doesn’t cover short-term stays, again because the risks are different.

Do I need public liability insurance?

Public liability cover is highly recommended and often mandatory. If someone is injured at your holiday home or their belongings are damaged, the policy can pay out for legal costs and compensation.

Can I use Airbnb or Booking.com with this mortgage?

Most holiday let mortgage lenders are happy for you to list your property on these popular, trusted platforms.

Do lenders care if I use a letting agent or self-manage?

If it is a new property, such as a new purchase, then lenders prefer to see a holiday let agency running the marketing and providing a rental letter. For existing properties with a track record, they are normally happy to rely on the actual bookings in the last 12 months, regardless of how you generated them.

Remortgaging and investment portfolio growth

Can I remortgage my home to buy a holiday let?

Many lenders will let you release the equity in your home to fund a deposit on a holiday cottage to let.

Can I remortgage an existing buy-to-let into a holiday let mortgage?

Yes, as long as the property and the income it generates meet the lender’s criteria.

How many holiday lets can I own?

There’s no set limit, but each lender imposes their own maximum – often as little as one or two.

Can I use holiday let income to support another mortgage?

Some lenders will consider it, but it usually needs a couple of years of proven track record.

Holiday cottage investment risks, profitability and income stability

Are holiday lets more profitable than long-term lets?

They can be, but because people come and go, with multiple short term stays over the year, the income can be a bit less predictable.

How does seasonal income affect mortgage approval?

Lenders know how to stress-test income, and they’ll often average it out over the entire year to get a clear picture.

What happens if bookings drop?

You still have to make the usual mortgage repayments – always keep some cash to the side!

Are holiday let mortgages riskier?

Not necessarily. Income fluctuates, but it usually ends up quite consistent year on year, so long as the property is well maintained and marketed.

Any more questions?

We’re always happy to talk. If you haven’t found the answer you need here, contact our expert team for a friendly, no obligation discussion, or take a tour of our blog for the fine details about all sorts of relevant subjects.