Holiday let mortgage rates currently sit around 1 to 2 percentage points above standard buy to let, with fixed deals starting from roughly 5.5% at 75% loan to value and rising past 6.5% at higher LTVs or on non-standard properties. You’ll typically need a deposit of at least 25%, and most lenders also want personal income of £25,000 or more as a backstop against quiet months. The numbers changed materially after the furnished holiday lettings tax regime was scrapped in April 2025, so if you’re working from an old guide, some of what you read is now out of date.
This isn’t just a tax story either. Licensing has landed in Scotland, is arriving in Wales, and is on its way in England, and all three affect what a lender will accept before they’ll release funds. Here’s where the market actually stands.
What is a holiday let mortgage?
A holiday let mortgage is a specialist loan for a property let short-term to paying guests, typically for a few days to a few weeks at a time rather than under a standard six or twelve-month tenancy. It sits apart from both a standard buy to let mortgage (built for longer residential tenancies) and a second home mortgage (for a property you use yourself and don’t let commercially), according to guidance from Mortgage One.
Lenders assess these differently to ordinary rentals because the income is seasonal and less predictable than a fixed monthly rent. That’s reflected in higher deposits, income-cover tests built around seasonal projections, and a smaller panel of lenders willing to write the business at all.
Holiday let mortgage rates in 2026
As of mid-2026, fixed rate holiday let products commonly start from around 5.5% to 5.8% at 75% to 80% LTV, with some lenders pushing above 6.5% depending on the property type and how much you’re borrowing, according to money.co.uk and ABC Finance. Leeds Building Society, for example, has offered five-year fixed products from around 5.66% at standard LTV bands as of June 2026.
Rates generally run 1 to 2 percentage points above equivalent buy to let pricing. That premium reflects the smaller pool of lenders in this space and the higher perceived risk of income that fluctuates through the year rather than arriving as a fixed monthly rent.
A few things move the needle on pricing:
- Loan to value: applications under 65% LTV get the sharpest rates; anything above 75% narrows your lender choice fast.
- Property type: standard cottages and apartments price better than log cabins, non-standard construction, or anything in a very remote location.
- Borrower experience: first-time holiday let owners have access to fewer lenders than established operators with a track record.
- Rental income evidence: strong projections from a recognised letting agent, or two years of actual income for an existing let, open up better products.
Holiday let mortgage criteria
Lender criteria are fairly consistent across the specialist market, though the fine print varies. As a general guide, expect the following:
- Maximum LTV: usually 75%, with a small number of lenders stretching to 80% for stronger applications.
- Minimum deposit: 25% is the norm, though some lenders ask for 30% to 40% depending on the property and your experience.
- Minimum loan sizes: often start around £50,000 to £75,000, with maximum loans commonly capped somewhere between £500,000 and £1 million depending on the lender.
- Personal income backstop: most lenders want to see personal earned income of roughly £25,000 to £40,000 a year, so the mortgage isn’t entirely reliant on holiday bookings if a season underperforms.
- Age and property standards: applicants generally need to be 21 or over, and the property usually needs to be a conventional residential build in reasonable condition.
Interest-only options are common, but you’ll need a credible repayment strategy for the capital at the end of the term, just as with any other interest-only lending.
Furnished holiday let mortgage: the tax picture has changed
If you’ve seen the term “furnished holiday let” (FHL) used as shorthand for a tax-advantaged category of property, that category no longer exists in the way it used to. The FHL tax regime was abolished from 6 April 2025 for income tax and capital gains tax purposes (1 April 2025 for companies), confirmed in the October 2024 Budget legislation, according to the House of Commons Library.
Before the change, a property qualifying as an FHL (available to let for at least 210 days a year and actually let for at least 105 days, with no single stay over 31 consecutive days) got treated more like a trading business than an investment property. That brought several benefits, all now gone for new activity:
- Mortgage interest relief: previously deductible in full against rental income. From April 2025, relief is capped at the basic rate, given as a 20% tax credit, exactly the same restriction that’s applied to standard residential landlords since 2020, according to BDO.
- Capital allowances: no longer available on new spending on furniture, fixtures and equipment. Existing capital allowance pools can still be run down over time, but nothing new can be claimed after the change, according to ACCA.
- Capital gains tax relief: business asset disposal relief (which gave a 10% CGT rate on sale) is no longer available on FHL disposals.
- Pension contributions: FHL profits used to count as relevant UK earnings for pension tax relief purposes. They no longer do.
- Income splitting for couples: married couples and civil partners could previously split FHL profits flexibly for tax purposes regardless of ownership share. From 6 April 2025, profits default to a 50:50 split unless you file Form 17 with HMRC alongside evidence of the actual ownership split, according to UK Landlord Tax.
The practical effect for anyone with a mortgage on the property: if you own a mortgaged holiday let personally and pay higher or additional rate tax, your 2025/26 tax bill is likely to be noticeably higher than 2024/25, because mortgage interest no longer offsets your income directly. This is exactly the same Section 24 restriction that’s applied to buy to let landlords since 2017, now extended to holiday lets. Many owners are reviewing whether a limited company structure makes more sense going forward, since company borrowing still gets full interest deductibility, though that’s a decision to make with an accountant rather than a mortgage broker.
Holiday let vs buy to let: what’s actually different
The tax gap between the two has narrowed significantly since April 2025, since both are now taxed under the same standard property income rules with the same mortgage interest restriction. What still separates them is how lenders assess and price the mortgage itself.
Income assessment. A buy to let mortgage is underwritten against one fixed monthly rent. A holiday let mortgage is assessed against a seasonal income projection, usually built from a mix of peak, shoulder and off-peak periods, with an income coverage ratio (ICR) applied at each. Most lenders in 2026 use an ICR of 125% to 145%, according to ABC Finance, with limited company applications typically sitting at the lower end.
Deposit. Standard buy to let usually asks for 25% down. Holiday let mortgages often ask for the same minimum, but a meaningful slice of the market sits at 30% to 40%, particularly for weaker rental projections or non-standard properties.
Personal use. A buy to let tenant lives in the property; you don’t. A holiday let owner can usually stay in the property themselves, subject to a cap, commonly up to around 90 days a year, though the exact limit is set by the individual lender and varies, according to Holiday Cottage Mortgages. Time you spend there yourself doesn’t count towards the commercial letting evidence a lender or HMRC would want to see.
Rate. Holiday let rates sit roughly 1 to 2 percentage points above equivalent buy to let pricing, reflecting the smaller lender pool and seasonal income risk.
Regulation. Both are typically arranged as commercial, unregulated lending rather than FCA-regulated residential mortgages, though the broker arranging the loan should still be FCA-regulated.
Personal use restrictions on a holiday let mortgage
If your main goal is a holiday home you’ll mostly use yourself, with occasional letting to cover costs, a holiday let mortgage probably isn’t the right product. Lenders in this market are pricing and underwriting the loan on the assumption that the property earns commercial income for most of the year, and most want the property available for letting without restriction for the majority of it.
Where personal use is allowed, a cap of around 90 days a year is common, though this varies by lender and isn’t guaranteed. Go over the limit and you risk breaching your mortgage terms, separately from any tax consequences. If personal use is genuinely your priority rather than a secondary benefit, a second home residential mortgage is usually the better fit, since it’s built for exactly that use case rather than commercial letting.
Living in the property full time isn’t permitted under a holiday let mortgage at all. Full-time occupation of a property funded this way (or under a standard buy to let mortgage) breaches the lender’s terms, according to Mortgage Lane, regardless of what local planning conditions say about the property itself.
Holiday let lenders in the UK: who’s writing this business
This remains a specialist corner of the mortgage market. High street lenders generally don’t offer holiday let products, so you’re working with building societies and specialist buy to let lenders that have built dedicated ranges, including names such as Leeds Building Society, Cambridge Building Society and a handful of others that write both personal and limited company applications.
A recognised letting agent’s income projection carries real weight with underwriters, and for an existing holiday let, one to two years of actual booking income is usually stronger evidence than a fresh projection. Property type matters too: lenders generally prefer conventional houses, cottages and apartments in areas with proven holiday demand over unusual builds like log cabins, pods or converted barns, which narrow your lender choice further.
Scotland is a smaller, tighter market again. Fewer lenders will consider Scottish property at all, criteria tend to be stricter (particularly for remote locations), and, as covered below, the property’s licensing status now factors directly into whether a lender will proceed, according to Mortgage One.
Licensing: Scotland, Wales and England are all moving
This is the area of the market that’s changed fastest and where a lot of older guides are now out of date.
Scotland has run mandatory short-term let licensing since October 2022. Every operator needs a licence from their local authority, covering safety, insurance and maximum occupancy, and the scheme applies to holiday cottages, B&Bs, rooms within a home and unconventional accommodation such as pods and yurts. Enforcement has been active: Edinburgh designated the whole city a control area, and planning refusal rates there for residential-to-short-term-let conversions reportedly reached 97% in 2025, according to STL Solutions. If you’re buying in Scotland, confirm the licensing position before you commit, since a lender may want to see it in place or clearly progressing.
Wales already ties business rates eligibility to letting activity: a Welsh holiday let must be available to let for 252 days a year and actually let for at least 182 days to qualify for business rates rather than second-home council tax, which can carry a premium of up to 200% in some local authorities if you miss the threshold, according to Fox Davidson. On top of that, Wales introduced dedicated planning use classes for short-term lets (Class C5 for lets under 183 days a year, Class C6 for shorter commercial lets) back in October 2022, and a national registration scheme under the Visitor Accommodation (Register and Levy) Etc. (Wales) Act 2025 is expected to open for registration in autumn 2026, run through the Welsh Revenue Authority rather than local councils.
England doesn’t have a licensing scheme live yet, but one is coming. A national short-term let registration scheme is expected to launch during 2026, alongside a proposed new planning use class (C5) that would let local authorities designate control zones where short-term letting needs full planning permission, similar in spirit to Scotland’s approach. Details are still firming up, so treat any specific date as provisional and check GOV.UK before you rely on it. Separately, London already restricts entire-property short-term letting to 90 nights a year without planning permission for change of use, under the Deregulation Act 2015, and several boroughs have Article 4 directions in place that tighten this further.
The pattern across all three nations is the same direction of travel: more paperwork, more local authority oversight, and a growing expectation that lenders and buyers alike can evidence the property’s compliance position. If you’re buying now, ask the seller for existing licence or registration documentation as standard due diligence, the same way you’d check planning permission on any other specialist property.
FAQs
Are holiday let mortgage rates higher than buy to let?
Yes, typically by around 1 to 2 percentage points. This reflects the smaller pool of specialist lenders willing to write holiday let business and the higher perceived risk from seasonal, rather than fixed monthly, rental income.
What deposit do I need for a holiday let mortgage?
Most lenders ask for a minimum of 25%, capping borrowing at 75% LTV, though some ask for 30% to 40% depending on the property type and your experience. A small number of lenders will stretch to 80% LTV for stronger applications.
Is the furnished holiday tax regime still available?
No. It was abolished from 6 April 2025 for income tax and capital gains tax (1 April 2025 for companies). Holiday lets are now taxed under the same rules as standard residential property income, including the same restriction on mortgage interest relief that’s applied to buy to let landlords since 2017.
Can I live during my holiday?
Usually yes, but only up to a limit set by your lender, commonly around 90 days a year, and this doesn’t count towards the commercial letting evidence needed for the mortgage. You can’t use a holiday let mortgage to fund full-time residence in the property.
Do I need a licence for a holiday let?
It depends where the property is. Scotland has required a licence from the local authority since October 2022. Wales has planning use classes in place already and a national registration scheme expected to open in autumn 2026. England doesn’t have a live scheme yet, but a national registration scheme and a new planning use class are both expected during 2026.
How do lenders assess holiday let rental income?
Lenders look at seasonal projections rather than a single monthly rent figure, usually built around peak, shoulder and off-peak periods, and apply an income coverage ratio, commonly 125% to 145% in 2026. For an existing holiday let, one to two years of actual booking income usually carries more weight than a fresh projection.
Is a holiday mortgage regulated by the FCA?
Generally not. Holiday let mortgages are typically arranged as commercial, unregulated lending, in the same way most buy to let mortgages are. The broker arranging your mortgage should still be FCA-regulated, even though the lending itself often isn’t.
What’s the minimum personal income needed for a holiday let mortgage?
Most lenders want to see personal earned income of around £25,000 to £40,000 a year, used as a backstop in case rental income falls short during a quiet season. This is on top of, not instead of, the property’s own rental projection.
