A holiday let mortgage is a specialist form of property finance designed for homes you plan to rent out on a short-term basis to holidaymakers and tourists. At Fox Davidson, award-winning UK mortgage brokers established in 2013, we arrange holiday let and Airbnb mortgages across the UK for individuals, joint borrowers and limited companies.
We typically work on loans from £250,000 upwards, with no upper limit, including complex cases and portfolio investors. Whether you’re purchasing a Cornish cottage or refinancing a Lake District apartment, our team can source competitive terms from mainstream lenders, building societies and specialist providers.
2026 is a pivotal year for holiday let investors. The April 2025 removal of furnished holiday let tax advantages means holiday lets are now taxed similarly to standard buy to lets, with mortgage interest relief restricted to a basic rate tax credit. Additionally, 2026 has seen tightening of planning and licensing rules in popular areas such as Cornwall, the Lake District and parts of London, with some councils now requiring specific licences for short-term letting. New holiday let regulations are proposed in 2026 too.
Despite these regulatory changes, demand for UK staycations and short-term lets via Airbnb, Vrbo and Booking.com remains strong in 2026. Where the numbers stack up, holiday lets continue to offer attractive yields and the potential to earn income from a property you can also enjoy yourself.
Key Points:
- Holiday let mortgages require higher deposits (typically 25–30%) and have stricter affordability criteria than standard buy to let products.
- Lenders assess projected holiday rental income, not just assured shorthold tenancy (AST) rental figures.
- Planning and licensing requirements vary by region and can impact mortgage eligibility.
- Tax treatment has changed since 2025, affecting net returns on holiday let investments.
- Working with a specialist holiday let mortgage broker helps navigate lender criteria, regulation, and secure the best mortgage deal.
What this article covers:
- Definition and features of holiday let mortgages and how they differ from other mortgage products
- Eligibility and lender criteria for 2026
- Deposit requirements, mortgage rates and loan-to-value (LTV) expectations
- Comparison of holiday let, buy to let and second home mortgages
- Importance of working with a specialist holiday let mortgage broker
- The four-step mortgage application process
- Options for limited company, portfolio and expat borrowers
- Recent tax and regulation changes affecting holiday let mortgages
- Real-world example scenarios
- Costs, risks and preparation advice
- Frequently asked questions about holiday let mortgages
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What Is a Holiday Let Mortgage in the UK?
A holiday let mortgage is a specialist mortgage product designed for properties you intend to let on a short-term basis to paying guests, typically for days or weeks at a time rather than months or years. Unlike a standard residential mortgage for your own home or a conventional buy to let mortgage aimed at long-term tenants, a holiday let mortgage recognises the unique income patterns and usage requirements of short-term holiday rental properties.
The key difference between a holiday let mortgage and a standard buy to let mortgage lies in how lenders assess income and risk. With holiday lets, rental income is seasonal and variable. Lenders therefore stress-test affordability against projected rental income across low, mid and high seasons rather than assuming consistent monthly rent from an assured shorthold tenancy. Lenders also apply specific mortgage criteria, such as minimum deposit size, acceptable property type, and occupancy limits, which must be met to qualify for a holiday let mortgage.
Main characteristics of a holiday let mortgage:
- Short-term lettings only – no single booking should typically exceed 31 days
- Lenders expect the property to be genuinely available for commercial holiday letting (often 210 or more days per year)
- Actual paid lettings required each year (commonly at least 105 days)
- Restrictions on owner-occupation, usually capped at around 90 days per year
- Higher interest rates compared to standard buy to let, reflecting perceived income volatility
- Affordability assessed using seasonal rental projections rather than fixed monthly rent
You may hear terms like “Airbnb mortgage” or “short-term let mortgage” used interchangeably. These are informal terms for holiday let lending. Whether you plan to list on Airbnb, Booking.com, Vrbo or through a traditional holiday letting agent, the mortgage product you need is a holiday let mortgage. Holiday lets continue to offer attractive yields for investors. In fact, holiday lets are known for generating higher yields compared to standard buy to let properties, especially during peak seasons when rental income is at its highest.
Can I Get a Holiday Let Mortgage in 2026?
Many borrowers can obtain holiday let mortgages in 2026. However, lender criteria have tightened in certain high-pressure tourist hotspots following new local licensing and planning rules. Some lenders now restrict lending in areas where councils have introduced caps on new short-term lets or require specific licences.
Many lenders, including building societies, offer holiday let mortgages with specific terms and conditions, such as limits on occupancy and loan-to-value ratios. These criteria vary, so it is important to check each lender’s requirements.
Key factors lenders assess in 2026 include:
- Your personal income and employment status
- Deposit size (typically minimum 25%)
- Credit history and existing debt
- Property location and type
- Projected rental income based on local demand
- Whether the property will genuinely operate as a commercial holiday let
- Your experience as a landlord (though first-time landlords can still be approved)
Fox Davidson can secure holiday let mortgages for:
- UK residents buying in personal names or jointly
- Limited companies (Special Purpose Vehicles and trading companies)
- Some UK expats via specialist lenders where criteria are met
Typical minimum income requirements in 2026 vary by lender. Many require at least £25,000–£35,000 in earned income, with higher thresholds for complex or multi-unit cases. Self-employed applicants generally need two to three years of accounts or SA302 tax returns.
First-time landlords and applicants with no prior holiday let experience can be approved, provided the overall financial profile and income meet lender criteria. Lenders assess the full application rather than rejecting based solely on inexperience.
Example profile: A professional couple with combined income of £85,000 looking to buy a £450,000 cottage in Devon with a 30% deposit (£135,000). Neither has owned a holiday let before, but both own their residential home outright. This profile would typically be acceptable to multiple lenders in 2026.
Eligibility & Lender Criteria for Holiday Lets
Lender criteria vary widely, and matching borrowers to the right lender based on detailed knowledge is where a specialist mortgage broker adds significant value.
Borrower Requirements
- Minimum and maximum ages: Most lenders require applicants to be at least 21 at application. Maximum ages typically range from 75 to 85 years at the end of the mortgage term, with some specialist lenders extending further if affordability supports it.
- Minimum earned income: Commonly £25,000 to £40,000 or more depending on lender and borrowing structure. Some lenders have no minimum income requirement but assess overall affordability more stringently.
- Home ownership: Many lenders require you to already own your own home (mortgaged or owned outright). Some specialist lenders accept non-homeowners.
- Credit history: Clean credit is preferred, though some lenders consider minor historic issues case-by-case.
Property Requirements
- Acceptable locations: Typically UK mainland and recognised tourist areas. Some lenders restrict Scotland, remote islands or specific postcodes.
- Minimum property values: Often £150,000 to £200,000 and above, though this varies.
- Exclusions: Static caravans, park homes, most lodges on holiday parks, and properties with restrictive occupancy clauses or agricultural ties are generally not acceptable.
Affordability and Rental Stress Test
Lenders assess projected rental income across seasons. A typical requirement is that gross or net projected rent covers 125% to 145% of a stressed interest rate (commonly 6.5% to 8.5% in 2026 stress tests). Some lenders allow “top-slicing” — using surplus personal income to support the application when seasonal rental income alone falls short.
Example 2026 Lender Criteria (Illustrative)
Criterion | Typical Requirement |
|---|---|
Minimum age | 21 years |
Maximum age at term end | 75–85 years |
Minimum earned income | £25,000–£40,000 |
Maximum LTV | 75–80% |
Minimum property value | £150,000–£200,000 |
Rental stress coverage | 125–145% at 6.5–8.5% |
Note: This table is for illustration only. Actual criteria vary by lender and are subject to change.
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Deposit, Rates & Loan to Value (LTV) in 2026
Most mainstream and specialist holiday let lenders in 2026 offer up to 75% LTV, with a select few extending to 80% LTV for very strong cases. At Fox Davidson, we regularly arrange loans in the 60–75% LTV band.
Deposit Guidelines
- Minimum deposit: 25% (75% LTV) is the standard minimum for most lenders.
- Stronger terms: Better rates often available with 30–40% deposit (60–70% LTV).
- Non-standard properties: Higher deposits may be required for unusual construction, remote locations or properties in areas with new licensing restrictions.
Interest Rate Trends in 2026
Since the Bank of England began reducing the base rate through late 2025 and early 2026, holiday let mortgage rates have eased slightly from their 2023–2024 peaks. However, rates still sit around 1 to 2 percentage points above equivalent vanilla buy to let mortgage rates due to the higher perceived risk from seasonal income.
Illustrative 2026 rate range: Fixed rates from approximately 4.75% to 6.5% depending on LTV, product type and lender. These figures are for illustration only and are not offers or advice.
Available Product Types
- Fixed rates: 2-year, 3-year, 5-year and 10-year fixed rate products available.
- Variable products: Discounted variable and tracker products linked to the lender’s standard variable rate or Bank of England base rate.
- Repayment options: Interest only, capital repayment, or hybrid “part and part” structures where you repay either an interest-only portion alongside capital repayment.
Indicative LTV, Deposit and Rate Comparison (2026 Illustration)
LTV | Deposit Required (£500k property) | Indicative Rate Range |
|---|---|---|
60% | £200,000 | 4.75%–5.50% |
70% | £150,000 | 5.00%–5.85% |
75% | £125,000 | 5.25%–6.25% |
Note: Rates shown are generic illustrations only, not live pricing. Actual rates depend on individual circumstances, lender appetite and market conditions at time of enquiry.
When comparing mortgage options, consider the overall cost including any product fee, valuation fees and legal costs – not just the headline rate. A lower initial rate period may come with higher fees, while a slightly higher rate with minimal fees could work out cheaper over time.
Holiday Let vs Standard Buy to Let vs Second Home Mortgages
Choosing the correct mortgage product is essential. Using the wrong type – for example, a standard residential mortgage or second home loan for a full-time holiday rental – can breach your mortgage conditions and create serious problems with your lender.
Key Differences
Holiday let mortgage:
- Designed for frequent short-term guests (days or weeks, not months)
- Rental income assessed seasonally with stress testing
- Higher mortgage interest rates than standard buy to let
- Specific occupancy rules (typically max 90 days personal use)
- Lenders expect genuine commercial holiday letting activity
Standard buy to let mortgage:
- Aimed at long-term tenants on assured shorthold tenancies (typically 6–12 months minimum)
- More lenders available, creating more competition and often lower rates
- No significant personal use permitted
- Income assessed on consistent monthly rent
Second home / residential mortgage:
- Primarily for owner-occupation and occasional family use
- Not intended for continuous paid lettings
- Using a second home mortgage while running a commercial holiday let would breach mortgage terms
How Lenders View Mixed Usage
If you want to enjoy the property yourself while also generating holiday rental income, you need a genuine holiday let mortgage. Most allow reasonable personal use of around 90 to 120 days per year, provided the property operates as a commercial holiday let for the remainder.
Comparison Table
Feature | Holiday Let | Standard BTL | Second Home |
|---|---|---|---|
Typical tenancy length | Days to weeks (<31 days) | 6–12+ months | N/A (owner use) |
Primary use | Paying holiday guests | Long-term tenants | Owner occupation |
Rental income assessment | Seasonal projections | Fixed monthly AST rent | Not applicable |
Personal use allowed | Up to 90–120 days | Minimal/none | Primary purpose |
Typical rates (2026) | 4.75–6.5% | 4.00–5.50% | 4.50–5.75% |
Why Work with a Specialist Holiday Let Mortgage Broker?
Fox Davidson is a specialist holiday let mortgage broker with nationwide coverage and strong relationships with major banks, building societies and specialist lenders. In 2026, working with a broker who understands this niche is more valuable than ever.
Why Using a Broker Matters in 2026
- Fewer lenders in certain areas: Some lenders have restricted lending in holiday hotspots due to new local licensing requirements.
- Variable criteria: Rules around licensing, planning use class and occupancy conditions differ significantly between lenders.
- Complex structures: Limited company applications, portfolio landlords, expats and higher-value properties require specialist knowledge.
- Broker-only access: Many specialist lenders operate through brokers only and don’t accept direct applications from the public.
Benefits of Working with Fox Davidson
- Experience since 2013: Arranged millions of pounds in holiday let and short-term let finance across England, Wales and parts of Scotland.
- Access to 100+ lenders: Including private banks for larger loans and unusual properties.
- Fast decisions: Typically obtain decisions in principle within 24 to 48 hours once full information is provided.
- Comprehensive across market advice: Not tied to any single lender, so we find the best mortgage deal for your circumstances.
- Expert advice: Understand the nuances of seasonal rental income assessment, limited company applications and local market conditions.
We provide a free initial, no-obligation consultation, usually via phone or video call. From there, we support clients by phone, email and online throughout the UK.
Our 4-Step Holiday Let Mortgage Process
At Fox Davidson, we follow a clear 4-step process from enquiry to completion, designed to work efficiently for busy clients and portfolio investors.
Step 1 – Discovery & Strategy
We start by collecting details about your income, assets, credit profile, existing property portfolio and target holiday let (location, value, expected rent). We review local holiday letting demand and explore whether personal or limited company ownership is more appropriate – always recommending you confirm tax implications with your accountant.
Step 2 – Lender Research & Decision in Principle
We research the whole market, including high street banks, regional building societies and specialist lenders. Once we have complete information, we usually secure a Decision in Principle (DIP) within 24 to 48 working hours. This gives you confidence when making offers on properties.
Step 3 – Full Application & Valuation
We submit the formal mortgage application along with supporting documents: ID, proof of income, portfolio schedule (if applicable), and rental projections. The lender then instructs a valuation. Typical timeframes for valuations and underwriting in 2026 range from 1 to 3 weeks depending on lender and location.
Step 4 – Offer & Completion
Once underwriting is complete, you receive a formal mortgage offer. We check this thoroughly, coordinate with your solicitors, and manage the process through to completion. Straightforward cases typically complete 6 to 12 weeks from offer acceptance. We provide proactive updates at each milestone until funds are released.
Limited Company, Portfolio & Expat Holiday Let Mortgages
Many investors now use limited companies (SPVs) for holiday lets, especially following the alignment of furnished holiday let and buy to let tax rules from April 2025.
Limited Company Lending
Fox Davidson regularly arrange holiday let mortgages for SPVs (typically with SIC code 68209 or similar) and trading companies. Personal guarantees from directors are usually required. Rates for limited company structures are often slightly higher than personal name borrowing, with deposits typically 25 to 30%.
Portfolio Landlords
Lenders often apply “portfolio” rules once clients own 4 or more mortgaged properties. This means full portfolio cash-flow analysis and overall exposure checks. We gather a complete portfolio schedule using lender-compatible templates to speed up underwriting and ensure nothing delays your application.
UK Expats and Foreign Nationals
Some specialist lenders in 2026 continue to lend to UK nationals living abroad and, more selectively, to non-UK nationals with robust ties and income sources. Common additional requirements include larger deposits (often 30 to 40%), strong credit profiles, and sometimes minimum loan sizes of £300,000 or more.
Tax, Regulation & 2026 Rule Changes (High-Level Overview)
Important disclaimer: Fox Davidson are mortgage brokers, not tax advisers or solicitors. Clients must seek professional tax and legal advice for their specific circumstances.
Key Recent Changes
- April 2025: Abolition of historic Furnished Holiday Let (FHL) tax advantages. Holiday lets are now broadly taxed like standard buy to lets, with mortgage interest relief restricted to a basic rate (20%) tax credit.
- 2025–2026: Expansion of local licensing and planning controls in parts of England and Wales. Some tourist hotspots now require short-term let licences, and proposed new Use Class rules in certain councils may affect planning requirements.
Why These Changes Matter for Mortgages
- Lenders increasingly want evidence that required licences are in place (or can be obtained) before approving lending.
- Some lenders may restrict lending in areas with tighter caps on new short-term lets.
- Income from holiday lets is typically treated as property income and may be subject to business rates or council tax depending on letting days and local authority rules.
Fox Davidson work alongside clients’ accountants and solicitors to ensure the finance structure supports their overall investment strategy, but we do not give tax advice ourselves.
Example Holiday Let Mortgage Scenarios (Case-Style)
The following are anonymised, realistic examples from typical cases we see, using 2026 pricing ranges for illustration only.
Scenario 1 – Coastal Cottage in Cornwall
A London-based couple are buying a £600,000 three-bedroom cottage near St Ives with a 30% deposit (£180,000). They’re targeting weekly rents from £750 in low season to £2,000 in peak August weeks, with projected annual gross rent around £45,000.
We secured a 5-year fixed, interest-only holiday let mortgage at 70% LTV with a specialist lender. The lender stress-tested against the fixed rate and was satisfied the projected rental income covered the monthly mortgage payment with headroom. The product fee was 1.5% (added to loan) with a fixed rate around 5.15%.
Scenario 2 – Lake District Apartment via Limited Company
An experienced investor is using an SPV to purchase a £400,000 two-bedroom apartment near Windermere with a 25% deposit (£100,000). The property will be let via Airbnb and Booking.com at an average nightly rate of around £160 with expected 65% occupancy.
The lender assessed stress against a 6.5% notional rate and accepted the company structure with director guarantees. A 5-year fixed rate was secured at approximately 5.65% on an interest-only basis, with the annual percentage rate including fees working out at around 6.1%.
Scenario 3 – Portfolio Landlord Diversifying into Holiday Lets
An existing landlord with 8 standard buy to lets is adding a £750,000 holiday barn conversion in North Yorkshire. This required more detailed underwriting including a full portfolio spreadsheet, background gearing checks and overall cash-flow analysis.
The lender used top-slicing from the borrower’s high earned income (£150,000) to support the application where seasonal projected rental income alone was borderline. A 10-year fixed rate was secured to provide long-term certainty, with capital repayment on a 25-year term.
Note: All figures are illustrative, not offers or advice. Live terms vary with market conditions and lender policy at time of enquiry.
Costs & Risks of Holiday Let Mortgages
While holiday lets can produce higher yields than standard buy to lets, sometimes 5 to 8% gross in prime locations compared to 4 to 6% for long-term rentals, they also involve higher costs and more volatility.
Typical Upfront and Ongoing Costs
- Lender arrangement/product fees: Often 1 to 2% of the loan amount, sometimes addable to the loan.
- Valuation fees: Typically £300 to £1,500 or more depending on property value.
- Legal fees: £1,000 to £2,500 or more for purchase or remortgage.
- Local licensing fees: Where applicable, £100 to £500 or more depending on council.
- Ongoing running costs: Utilities, cleaning between guests, linen, specialist holiday let insurance, marketing, online travel agent (OTA) commissions (typically 12 to 20%), repairs, and management fees (often 15 to 25% of rental if using an agent).
Risk Factors
- Seasonality and occupancy risk: Off-peak voids and demand swings due to weather, economic conditions or travel patterns can significantly impact income.
- Regulatory risk: Future changes to local planning or licensing regimes could restrict short-term letting in your area.
- Interest rate risk: Particularly on variable-rate or tracker products if rates rise during your mortgage term.
- Income volatility: Unlike long-term tenants on fixed ASTs, holiday rental income fluctuates and cannot be guaranteed.
At Fox Davidson, we help clients stress-test their plans with conservative occupancy and rate assumptions before proceeding. Understanding the maximum amount you could be required to pay if income drops is essential preparation.
How to Prepare Before Speaking to a Holiday Let Mortgage Broker
This checklist will help you accelerate your mortgage application with Fox Davidson.
Documents and Information to Gather
- Proof of ID (passport or driving licence)
- Proof of address (utility bill or bank statement from last 3 months)
- Latest 3 to 6 months’ payslips and most recent P60 (employed applicants)
- Latest 2 to 3 years’ accounts and SA302s (self-employed applicants)
- Details of existing mortgages and loans including recent statements
- Full portfolio schedule if you own 4 or more properties
Property Information
- Target purchase price and postcode
- Property type (house, flat, cottage, etc.)
- If remortgaging: current value estimate and outstanding mortgage balance
- Independent rental projections from a local holiday letting agent where possible
Personal Strategy Decisions
- Will you borrow in personal names or via a limited company?
- How much personal use do you intend versus guest use?
- What are your long-term plans – hold, refinance, or potentially convert to standard buy to let in future?
- Have you consulted an accountant about tax implications?
Frequently Asked Questions – Holiday Let Mortgages in 2026
This section addresses the most commonly asked questions about UK holiday let mortgages in 2026.
The typical minimum deposit is 25% (75% LTV). However, deposits of 30 to 40% often secure more competitive rates, and higher deposits may be required for unusual properties, remote locations or areas with new licensing restrictions. Providing a larger deposit generally opens access to better terms.
Yes, holiday let mortgage rates are generally 1 to 2 percentage points higher than equivalent buy to let products in 2026. This reflects the higher perceived risk from seasonal rental income and shorter tenancy periods. However, the potential for higher yields from holiday lets can offset this difference.
Many lenders accept properties let via Airbnb and similar platforms. They apply standard holiday let criteria and may want evidence of realistic nightly rates and expected occupancy levels. Some lenders have more experience with platform-based lettings than other holiday lets – we can guide you to appropriate options.
Lenders typically require projected rental income to cover 125% to 145% of a stressed interest rate (often 5% to 7% in 2026). The exact figures vary by lender, your tax band, and whether the mortgage is in a personal name or limited company. Meeting certain criteria around income coverage is essential for approval.
Most lenders allow reasonable personal use, typically up to around 90 days per year, provided the property is genuinely run as a commercial holiday let for the remainder. You need to balance enjoying your holiday home with meeting the commercial letting requirements that make the property qualify for this type of mortgage.
Most holiday let mortgages are unregulated business loans because the property is primarily for commercial letting rather than personal occupation. However, if there is significant personal occupation and minimal letting, residential mortgage rules may apply instead, which would make it a regulated product.
Some lenders accept first-time landlords, and a smaller number will consider first-time buyers. Criteria are typically tighter, with higher deposits or stronger personal income requirements. Having a flexible approach and working with a broker who knows which lenders are open to newer investors is valuable.
A typical range is 6 to 12 weeks from application to completion, assuming no complex legal or planning issues and responsive solicitors. More complex cases involving limited companies, portfolios or unusual properties may take longer. We provide updates throughout to keep the process on track.
Common exclusions include static caravans, most park homes, lodges on holiday parks with restrictive usage covenants, properties with agricultural ties or occupancy restrictions, and non-standard constructions. Each lender has specific criteria – we can quickly identify whether your target property is likely to be acceptable.
Yes, this is usually done via remortgage to a lender who accepts short-term lets. If your current lender’s terms prohibit holiday letting, you’ll need to move to an appropriate product. Fox Davidson can review your current situation and identify 2026 market options that suit your plans.
Contact Fox Davidson – Your UK Holiday Let Mortgage Broker
Ready to discuss your holiday let, Airbnb or short-term let mortgage plans? Fox Davidson offer an initial, free, no-obligation initial consultation to explore your options and answer your questions.
Get in touch:
- 📞 Call for immediate expert advice.
- 💻 Complete our enquiry form and we will call you at a convenient time
- 📧 Email outline your requirements in writing
We work with clients across England, Wales and much of Scotland. Whether you’re at the early idea and budgeting stage, ready to secure an Agreement in Principle, or need support managing a complex application through to completion, we’re here to help.
Our advice: Contact us early, ideally before offering on a property. This allows us to check affordability, confirm lender appetite for the specific location, and discuss whether personal or limited company ownership makes sense for your situation. Early preparation often means a smoother, faster process when you find the right property.
Fox Davidson are award-winning UK mortgage brokers with deep expertise in holiday let and specialist mortgage lending. Let us put that experience to work for you.
