Mortgages For Holiday Let Businesses: 5 FAQs

The allure of investing in short-term rental accommodation is proving particularly popular, with research from Lighthouse showing that the total supply of properties available was up four per cent in August compared to the year before.

Supply growth was seen across all UK regions, with the top cities reserved emerging as London, Edinburgh and Manchester, while interest in Brighton also appears to be on an upward trajectory, with the city gaining one rank over the year.

Elsewhere, Office for National Statistics data indicates a 10.2 per cent increase in the number of guest nights spent in short-term lets in the UK between July 2024 and June 2025. 

Guest nights were up 12.4 per cent in Wales, 10.8 per cent in England, 10.2 per cent in Northern Ireland and 5.5 per cent in Scotland.

So, with all this in mind, perhaps now’s the time to consider making your next big business move, as it seems like it could be a potentially lucrative opportunity that awaits.

To help you decide if it’s the right path for you, here are some frequently asked questions about mortgages for holiday let businesses.

1. What’s the difference between a holiday let mortgage and a buy to let mortgage?

The main difference between these two non-residential mortgages is the length of tenancy agreement that’s permitted for the property in question.

Buy to let mortgages enable you to buy a property that can be let to tenants as their main residence. The mortgage agreement will state that you cannot live in this property yourself and that it should be let to paying tenants.

Holiday let mortgages, meanwhile, enable you to purchase a property to let it commercially to holiday makers and other short-term rental occupants. The property, the location and its potential as rental accommodation will affect lender decisions.

2. What are typical interest rates for holiday let mortgages like?

You’ll probably find that mortgages for holiday homes are more expensive than more traditional buy to let products. There are still fixed and variable rate deals available, but talk through your options with your mortgage broker to find the most appropriate choice for you.

3. How much deposit do you need for a holiday let mortgage?

You will most likely require a minimum 25 per cent deposit to take out a short-term rental mortgage. Lenders often consider this type of letting to be riskier than traditional buy to let.

4.Can I use my short-term rental property myself?

Yes, with some lenders you are permitted to stay in your holiday home for up to 60 days per year.

5. Which lenders provide holiday let mortgages?

You’ll find that some buy to let lenders will have specific holiday let mortgages, while others have commercial mortgage products available. However, it’s advisable to speak to a specialist broker if you want to access the full range of products on the market.

If you’d like to find out more, get in touch with the BR Needham team today.