Five mortgage moves for holiday let owners in a rising rates market

https://www.youtube.com/watch?v=HFm2DYDDGPU

Joe Stallard from House and Holiday Home Mortgages joined Host Planet to unpack what holiday let owners should actually be doing as mortgage rates rise and the prospect of near-term base rate cuts fades.

In this Host Planet Bitesize feature – powered by short-term rental property management software, Hostfully – Joe shares five practical moves worth making before your next renewal lands. Catch the full conversation on YouTube, Spotify, or Apple.

The macro backdrop for holiday let owners – and why this matters now

The global situation is, to put it politely, unpredictable. Geopolitical tension, sticky inflation in several major economies, and cautious central banks have all combined to push mortgage rates back up from the lows many owners had hoped would hold through 2026. In the UK specifically, the market has scaled back its expectations of near-term base rate cuts – which means the swap rates that lenders use to price fixed-rate mortgages have drifted higher, and the cheapest deals of six months ago have largely disappeared from the shelf.

For holiday let owners, that has a direct and uncomfortable effect on cashflow. A property that was comfortably profitable at a 4.5% mortgage rate can look very different at 5.5% or 6% – particularly once you layer in the Welsh regulatory environment, rising council tax premiums, and the ongoing aftermath of the furnished holiday let tax changes.

That's the context for Joe's five tips. None of them require you to predict where rates are going. All of them reduce the amount your business depends on that prediction being right.

Tip one: talk to a broker early – don't try to navigate this alone

The first and most important move for any holiday let owner in this market, in Joe's framing, is to speak to a specialist broker well before your fixed rate expires.

In a stable rates environment, it's tempting to treat a renewal as a calendar event – wait until the letter arrives, take whatever the existing lender offers, move on. In a rising and volatile market, that default behaviour is expensive. Product availability is changing week to week. Lenders are repricing at short notice. Some of the best-value holiday let mortgage products in the UK sit with smaller specialist lenders who don't advertise to the public and are only accessible via brokers.

James's summary captures the point directly: "Make a call, send the email, get in touch with the experts." Do it six months before your renewal, not six weeks.

The specialist lens matters here too. Holiday let mortgages – furnished holiday lets, serviced accommodation, multi-unit portfolios – are underwritten differently from standard residential or buy-to-let mortgages. A generalist broker will often miss the best products because they don't live in that space. A holiday let specialist broker is the person who knows which lender is currently accepting your specific profile, at what LTV, on what rental coverage assumption.

Tip two: reconsider long fixes – flexibility has a value in 2026

Joe's second tip is about the term of the fix you lock into. For years, the reflex advice in a rising rates environment has been to fix for as long as possible. In 2026, that reflex deserves more careful thought.

The logic is straightforward. Rates have risen quickly, and the market consensus – even if it's been pushed back – is that we are nearer the top of the cycle than the bottom. Locking into a five-year fixed rate at today's prices insulates you from further rises, but it also locks you out of any future cuts. If rates do eventually come down – whether that's in 12 months or 24 – a long fix becomes a drag on your business that's expensive to exit (early repayment charges on holiday let mortgages can be significant).

In that environment, many owners are looking harder at shorter fixed terms – two years, or even product transfers that give them optionality sooner. The trade-off is higher uncertainty at renewal, but the upside is the ability to refinance into a better product if and when rates soften.

There's no universally right answer here – and this is exactly the kind of decision a broker should be running the numbers on with you, side by side, using your actual property, your actual LTV, and your actual tolerance for monthly payment variability.

Tip three: tracker and variable rates deserve a second look

Joe's third tip extends the flexibility argument further. For some holiday let owners, a tracker or variable rate product is now worth seriously considering – rather than being dismissed as "too risky" the way it often is in default advice.

The case is this. When lenders are hedging on where the base rate goes next, they price fixed-rate products with a safety margin baked in. Trackers, which follow the base rate directly, often look more competitive on headline pricing than the equivalent fixed product. If the base rate stays flat or falls, you benefit. If it rises, your payments rise with it – but that's a risk you can sometimes stress-test against your rental income quite comfortably, depending on the property's cashflow.

James is honest about his own experience: he's been on variable rates for the last couple of years. The Liz Truss period was painful, but the last 18 months have been fine. The trade-off is not abstract – it's real money, in both directions.

This is very much a "depends on your personal circumstances" tip, and Joe is clear that it's not for everyone. Owners with tight cashflow margins or low tolerance for fluctuating monthly payments should probably not be on a variable rate in 2026. But owners with strong rental coverage and a bit of headroom in their P&L may find trackers a surprisingly attractive option right now.

Tip four: compare total cost, not just the headline rate

Joe's fourth tip is the one most owners get wrong, and it's the one with the quietest but largest financial impact.

When you compare mortgage products, the number that catches your eye is the headline interest rate. It's also the number lenders compete on most aggressively. The problem is that it's not the number that actually determines the total cost of the mortgage.

A 5.2% rate with a £999 arrangement fee can easily work out more expensive over a two-year fix than a 5.4% rate with no fee. A product with a lower rate but higher early repayment charges can turn into a trap if your plans change. A lender offering a cash-back incentive can be more or less valuable than an equivalent rate cut depending on how long you intend to hold the mortgage.

The right framing is to look at the total cost of the mortgage over the fixed period, including rate, fees, incentives, and exit flexibility. Your broker should produce this comparison for you as a matter of course – and if they don't, that's itself a flag.

For holiday let owners specifically, there's one additional wrinkle. Many specialist holiday let products price rental coverage and fees differently from standard buy-to-let. What looks expensive on rate can be substantially cheaper on total cost once the product's assumptions on rental income and LTV are factored in.

Tip five: get below the key LTV thresholds

The final tip is the one Joe and James agreed genuinely moves the needle – and it's the one most owners underestimate.

Mortgage rates are priced in loan-to-value bands, and the jumps between bands are often dramatic. A mortgage at 65% LTV will typically price materially better than one at 75% LTV, which in turn prices better than one at 80%. The exact deltas change with market conditions, but the principle doesn't.

The practical implication is that making a relatively modest overpayment, or drawing on savings to drop into a lower LTV band before a remortgage, can save you significant money over the life of the mortgage. In some cases, a couple of thousand pounds of overpayment to drop below a band threshold can save multiples of that figure in interest across the fix.

This is the single most actionable tip for owners approaching a renewal in the next 6–12 months. Sit down with your broker and ask: what's my current LTV, where are the band breakpoints on the products we're likely to target, and what would I need to pay down to cross into a better band? Then run the numbers. The answer is often a clear and profitable yes.

Frequently asked questions

Should I remortgage my holiday let now or wait for rates to fall? Joe's core message is that timing the market is the wrong frame. Talk to a specialist broker well before your current rate expires, understand the full range of options (different fix lengths, trackers, product transfers), and make a decision based on your specific property, LTV, and cashflow – not on a forecast nobody can reliably make.

Is a two-year fix better than a five-year fix for a holiday let in 2026? It depends on your view of where rates are going, your tolerance for renewal risk, and how close you are to key LTV bands. In a market that many believe is nearer the top of the cycle than the bottom, shorter fixes preserve the optionality to refinance if rates fall. Longer fixes protect you if they rise further.

Are tracker mortgages a good idea for holiday let owners right now? They can be – particularly for owners with strong rental coverage and some cashflow headroom. Trackers are often priced more competitively on the headline rate because lenders don't have to build in a fixed-rate safety margin. They carry real risk if base rate rises, so this is a per-owner decision, not a blanket recommendation.

What is the single biggest mistake holiday let owners make when remortgaging? Comparing products on headline rate alone, rather than total cost over the fix. Arrangement fees, incentives, early repayment charges, and product flexibility can all materially change which deal is actually cheapest. A good broker models the total cost for you.

How much difference does loan-to-value really make on a holiday let mortgage? Often substantial. Mortgage rates are priced in LTV bands (65%, 75%, 80% are common breakpoints), and the jumps between bands can represent thousands of pounds of interest over a typical fix. Overpaying enough to drop into a lower band before remortgage is frequently the single highest-ROI move available.

Do I need a specialist broker for a holiday let mortgage? In almost all cases, yes. Holiday let and furnished holiday let mortgages are underwritten differently from residential or standard buy-to-let products. Specialist lenders often don't advertise to the public and are only accessible via brokers who work in that space daily.

The bottom line

The theme across Joe's five tips is the same: in a rising, volatile rates market, the move that protects your business isn't to predict what happens next. It's to reduce the number of ways your P&L breaks if the prediction turns out wrong.

Speak to a specialist broker early. Don't reach for a long fix by reflex. Keep tracker and variable products in the consideration set. Compare total cost, not headline rate. And if you're anywhere near a loan-to-value band threshold – find out exactly how much it would cost to get underneath it, because the answer is almost always worth it.

For holiday let owners navigating 2026, those five decisions compound more meaningfully than any single rate call ever will.

This interview is part of the Host Planet Bitesize series, sponsored by short-term rental property management software, Hostfully. Host Planet listeners benefit from two special offers from Hostfully – $500 off onboarding for the property management software and 30% off digital guidebooks for life. Click here for further details.