Holiday let mortgages explained
A holiday let mortgage finances a property let on a short-term, seasonal basis rather than on a standard tenancy. Lenders assess projected income across low, mid and high season (often from a letting agent estimate) and average it to a sustainable figure, usually want a higher deposit and a minimum personal income, and treat it as a letting business. A pure holiday let is generally not regulated by the FCA.
Why the income assessment is different
A standard buy-to-let has one steady rent. A holiday let earns more per night but only when it is booked, so income swings with the season. Holiday let lenders handle this by taking projected low, mid and high-season figures, usually from a specialist letting agent, and blending them into a sustainable average. Because the income is lumpier, lenders build in more caution: bigger deposits and a personal-income floor are common.
What lenders want to see
- A seasonal letting projection, often from a recognised holiday-letting agent.
- A deposit that is typically higher than standard buy-to-let.
- A minimum personal income separate from the rental projection.
- Evidence the property is suitable and permitted for short-term letting.
Common questions
How do lenders assess holiday let income?
Differently from a standard buy-to-let. Rather than a single assured-shorthand rent, lenders usually look at projected income across low, mid and high season, often using an agent's letting estimate, and average it to a sustainable figure. Some also want to see you could cover the mortgage on a standard buy-to-let basis as a fallback.
Can I use the property myself?
Most holiday let lenders allow some personal use, but they lend on the basis it is a genuine letting business, not a second home. If you mainly want a property for your own use, a second-home or holiday-home mortgage is a different product.
Do I need a minimum personal income?
Often yes. Because seasonal income is variable, many holiday let lenders require a minimum personal income (separate from the rent) so there is a cushion in quiet months. Deposits also tend to be higher than for standard buy-to-let.
Is a holiday let regulated?
A pure holiday let run as a business is generally not regulated by the FCA, like most buy-to-let. The picture changes if there is significant personal use or family occupation, which can make it a regulated case. A broker confirms which applies.
For standard rentals, start at the buy-to-let hub.
Founder, MortgageExplained
Adam spent over eight years as a mortgage adviser at Just Mortgages, with further experience in commercial finance. He is CeMAP and CF qualified. He built MortgageExplained to do one thing well: explain mortgages in plain English, so you know where you stand before you speak to a regulated broker. Every page on the site is written by Adam.
Last reviewed by Adam Parker