Holiday Let Mortgage FAQ
General information only. This is not financial advice.
Last reviewed: 2026-06-06
Can I get a mortgage for a holiday let property?
Yes. Specialist lenders offer holiday let mortgages designed for properties let on a short-term, furnished basis. The products differ from standard buy-to-let mortgages because the income assessment is based on projected seasonal occupancy rather than a fixed tenancy agreement. Minimum deposits are typically 25%, and lenders require an independent rental projection report from a recognised lettings agent to assess viability.
How do lenders assess rental income for holiday lets?
Lenders use projected annual rental income based on an assumed occupancy rate — typically 70–80% of available letting days at a blended seasonal rate. A rental projection report from a local lettings agent or specialist holiday let management company is usually required. The lender then stress-tests this income against the interest coverage ratio (ICR), typically at 125–145%, at a higher stressed rate than the actual product rate.
What is the ICR and how is it calculated for holiday lets?
The interest coverage ratio (ICR) measures whether projected rental income covers the mortgage interest payments by a sufficient margin. For holiday lets, most lenders require rental income to be at least 125–145% of interest at a stress rate (typically 5–6%). For example, if the mortgage interest is £12,000 per year, lenders typically require projected rental income of at least £15,000–£17,400 per year. Some lenders use peak and off-peak weighted averages to reflect seasonal income patterns.
What happened to furnished holiday let tax rules?
The furnished holiday let (FHL) tax regime was abolished by HMRC with effect from April 2025. Under the old rules, FHL properties qualified for capital allowances on furnishings, business asset disposal relief on sale, and relief on pension contributions from FHL profits. From April 2025, holiday let income is treated the same as standard rental income, with mortgage interest relief subject to the same 20% basic rate credit that applies to all rental property. Anyone with existing holiday lets should take independent tax advice to review their position.
What is the difference between a holiday let and an HMO for mortgage purposes?
A holiday let is a property let on short-term, furnished tenancies — typically to tourists or leisure visitors for periods of up to 31 days. An HMO (house in multiple occupation) is let room-by-room to unrelated tenants on individual agreements, often requiring an HMO licence. Lenders treat each type differently: HMO mortgages are assessed on aggregate room rents with an ICR; holiday let mortgages are assessed on seasonal projected occupancy income. Using the wrong mortgage type for either property category can breach the lender's terms.
Can I use holiday let income to support a residential mortgage?
Some lenders will consider holiday let rental income as additional income to support a residential mortgage application — particularly if you have a track record of rental income evidenced by tax returns or bank statements. However, lenders assess holiday let income conservatively: seasonal variability, void periods, and management fees are typically factored in. A specialist broker can identify lenders who are most pragmatic about including holiday let income in your residential affordability assessment.
Risk warning
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. This article is general information only and does not constitute financial advice.
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