Mortgages and short lets: what your lender allows

Why most mortgages rule out short lets

A mortgage is priced on how the home will be used. A residential mortgage assumes you live there as your main home. Typical conditions say you must not let the property, or part with or share possession of it, without the lender’s written consent, and must not change its use.

A standard buy-to-let mortgage assumes one tenant on an ordinary residential tenancy. In England that now means an assured periodic tenancy, which replaced assured shorthold tenancies on 1 May 2026; in Wales it is an occupation contract, and in Scotland a private residential tenancy. Holiday guests stay a few nights on a licence, not a tenancy, and many lenders’ criteria say plainly that holiday lets are not acceptable.

Lenders have practical reasons: more wear, a business use of the home, income that rises and falls with the seasons and a different insurance risk.

Does my mortgage allow it?

Start with your mortgage offer and mortgage conditions, the booklet that came with the offer. Look for the clauses on letting, parting with possession, use of the property and insurance.

Consent to let is written permission to let a home that is on a residential mortgage. It is designed for people who move out for a while and plan to come back, and usually assumes a long-term tenant, so ask specifically about holiday or short lets, in writing. A lease, planning rules and local registration can restrict short lets too; see our guides to leasehold flats and planning permission.

Typical responses. Each lender sets its own policy.

Consent is usually time-limited, often for a year or 18 months, and some lenders cap how many times it can be renewed before you must move to a buy-to-let or holiday let mortgage. Where holiday lets are allowed, read the conditions closely, such as limits on how long each stay can be.

The risks of letting without consent

Letting without permission is a breach of your mortgage terms. In practice many lenders start by asking you to stop, apply for consent or move to suitable terms, and may charge fees or a higher rate along the way.

If the breach is serious and you do not put it right, it can go further. One lender’s standard conditions let it declare the whole debt immediately repayable if you break a condition it reasonably considers serious and do not fix it within the time set in a written notice. If you cannot repay or refinance, the lender can seek possession through the courts.

Never tell a lender you will live in a home, or let it on a tenancy, when you already plan to short-let it. That is misrepresentation and can be treated as mortgage fraud.

Holiday let mortgages, and how they are assessed

A holiday let mortgage (sometimes called a short-term let mortgage) is a buy-to-let mortgage for a home let by the night or week. Instead of one monthly rent, the lender uses a projection of letting income across the year, usually from a holiday letting agent or short-let manager.

Many lenders take expected weekly income in the low, mid and high seasons, average it, assume a set number of letting weeks (Principality, for example, uses 30) and deduct management fees. That net income must cover the mortgage interest by a set margin, tested at a stress rate, usually above the rate you will pay.

For standard buy-to-let, the Bank of England’s rules describe 125% cover as the industry standard and set a floor for the test rate. Those rules do not count a stay of under a month as a rental agreement, so holiday let lenders set their own tests. Several ask for 140% or more.

Other common features: often a deposit of at least a quarter of the value, a minimum personal income, and, for homes already let, two years of accounts, tax returns or an agent’s letter. Some lenders only lend in recognised holiday areas, so a city flat let to work and leisure guests may need a lender with wider criteria.

If a lender wants a projection, ask your broker whether it will accept one from a short-let manager. Our free earnings report is a written, month-by-month 12-month forecast you can put to your broker.

Regulated or unregulated lending

Whether the Financial Conduct Authority (FCA) regulates your mortgage decides how much consumer protection you get. It turns on who lives in the home and whether you borrow as a business.

Close family includes a spouse or partner, parent, brother or sister, child, grandparent or grandchild.

The law treats you as borrowing for business if you buy a home to let and never live there, or already let another property. Letting your former home is the classic consumer buy-to-let case, but those loans assume a tenancy, so they rarely cover holiday lets. If you or close family will stay in the home, ask the broker how that affects the loan.

Buying through a limited company

Some owners buy holiday lets through a limited company set up to hold property. The main reason is tax: since the furnished holiday lettings regime ended in April 2025, individuals get only a basic-rate tax credit on mortgage interest, while a company can usually deduct it as a cost.

Lenders usually ask directors to sign personally for the loan as well, so the risk still comes back to you. Moving a home you already own into a company counts as a sale and can trigger capital gains tax and stamp duty. Get tax advice first, and see our guide to tax on short-let income.

Moving from a buy-to-let to a holiday let mortgage

If your home is on a buy-to-let mortgage and you want to switch to short lets, sort out the mortgage first.

1. Check your current dealFind the end date and any early repayment charge for leaving before it.
2. Ask your lenderSome offer holiday let products to existing borrowers; many do not.
3. Speak to a brokerCompare holiday let lenders and how each assesses income.
4. Get an income projectionA written forecast of seasonal income from a letting agent or short-let manager.
5. Apply and get a valuationThe lender values the home and checks the projection.
6. Start short lettingOnly once the new mortgage has completed and the insurance is in place.

If you have a tenant, the switch waits until the tenancy ends. In England you cannot end it just to start short-letting, so it usually begins when the tenant chooses to leave. Our guide to moving from a long let to a short let explains. Have these ready for the broker:

Questions to ask a broker

Use a broker who arranges holiday let mortgages regularly and searches the whole market. Ask:

• Does my current mortgage allow any short letting, or would my lender consent?
• Will these lenders accept my area and a mix of holiday and work guests?
• Whose income projection will they accept, and how many weeks do they assume?
• What cover and stress rate apply, and what does that let me borrow?
• How many nights can I stay in the home myself?
• What will leaving my current deal cost, and should I wait until it ends?
• Is the loan regulated, and how are you paid?

Write the answers down. If your plans change later, say back to a long-term tenant, ask the lender again before you switch.

Questions owners ask