Key information about holiday let mortgages

If you own or are planning to invest in a holiday let property, it’s crucial to get the right mortgage to support your goals. Unlike standard buy-to-let mortgages, a holiday let mortgage is specifically designed for properties that are rented out on a short-term basis, such as through Airbnb, Booking.com, or other vacation rental platforms (writes Howard Reuben, Principal, HCH Financial Services).

Whether you're purchasing your first holiday rental or expanding your portfolio, understanding how these specialist mortgages work can help you make smarter investment decisions – and avoid costly mistakes.

What is a holiday let mortgage?

A holiday let mortgage is a loan designed for properties intended to be rented out to guests on a short-term basis. These properties are typically located in tourist hotspots, coastal areas, countryside retreats, or major cities with a high volume of leisure travel.

Because short-term rental income can fluctuate throughout the year, lenders see holiday let mortgages as riskier than traditional buy-to-let mortgages. As a result, these mortgages come with different requirements, higher deposits, and more stringent lending criteria.

Key features of holiday let mortgages

Understanding the criteria lenders look at can help you prepare and improve your chances of approval.

1. Purpose of the property

Your property must be used for short-term holiday lets and not long-term residential tenancies. It should be actively marketed to paying guests – typically through platforms like Airbnb or Booking.com.

2. Higher deposit requirements

Most lenders require a larger deposit, typically between 25% and 40%, depending on the location and projected income of the property.

3. Interest rates

Expect slightly higher interest rates than standard buy-to-let products. This reflects the increased risk due to seasonal occupancy and variable income.

4. Rental income evidence

Lenders usually ask for:

• A holiday rental income projection

• Existing bookings (if already operating)

• A local agent’s opinion or comparative analysis of similar properties

  
  

5. Property management

You’ll often need to show how you plan to manage guest turnover, cleaning, and maintenance – whether you’ll do it yourself or hire a professional property management company.

6. Compliance and regulations

Holiday lets may be subject to:

• Local regulations or planning restrictions

• Fire safety and insurance requirements

• 90-day rules in certain cities (like London)

  
  

Important considerations before applying

Location is key

A strong location – close to attractions, beaches, or city centres – can result in higher occupancy and more consistent income. Lenders consider this when assessing risk.

Tax implications

Income from a furnished holiday let (FHL) can qualify for tax benefits, such as:

• Capital allowances

• Pension contributions

• Business rates instead of council tax

Speak to a specialist tax adviser to ensure you’re making the most of available reliefs.

Management demands

Holiday lets require more active management than long-term rentals. You may need:

• A channel manager or PMS (Property Management System)

• Cleaners and maintenance services

• Guest communication tools

Why choose a specialist holiday let mortgage broker?

Every lender has different criteria. Some may not lend on Airbnb-style properties at all, while others specialise in them.

At HCH Financial Services, we are expert holiday let mortgage brokers. We understand the short-term rental landscape inside and out – and we work with leading lenders to help you find the best deal for your situation.

Get personalised advice on your holiday let mortgage

Whether you're a seasoned host or buying your first short-term rental, we’re here to help:

• Call: 0333 1234 536

• Email: advice@hchfs.com

Let’s get your holiday let business financed the right way.