Getting an Airbnb Mortgage

With the rise of Airbnb, more and more people are looking to buy a property with a view to renting them out on the platform.

While you can get an Airbnb mortgage, there are some things you’ll need to consider beforehand such as whether you’re renting the whole house, whether the revenue you generate will cover your mortgage repayments and if you need ‘consent to let’ from your lender.

In this article, we’ll explain how to get a mortgage for a property you want to rent on Airbnb, what type of mortgage you might need and how a specialist broker can help guide you through the application process.

Can you get a mortgage for an Airbnb property?

Yes, it’s possible, but getting a mortgage for an Airbnb comes with some unique obstacles. You’ll need to ask yourself some relevant questions first before going ahead, such as:

• Will you be renting the whole house or individual rooms?
• How much revenue can you generate and will this cover the mortgage repayments?
• Are you planning to remain living in some part of the property?
• Do you need ‘consent to let’ from your existing lender if you already have a mortgage?
• How many days, weeks, or months are you thinking about renting the property on Airbnb?

What type of mortgages can you use for Airbnb?

The type of mortgage applicable for Airbnb use depends on the property, your circumstances, and the lender you deal with. Here’s a quick breakdown of potential options:

Buy-to-let (BTL) mortgage

A buy-to-let mortgage will be the most common type of mortgage used if your plan revolves around renting the whole home on Airbnb. Some BTL lenders may still put restrictions on a mortgage. This could be a cap on the maximum number of calendar days you can rent for, or specifying it must be holiday lets only.

Residential mortgage

A residential mortgage for Airbnb can be trickier. Using this type of home loan is only usually relevant if you live in the property and plan to rent rooms. Some lenders will put limits and rules on the number of days or rooms you can rent. This is often up to 90 days each year for any allowed rooms. Also, you’ll normally need to notify your lender for consent first.

Holiday let mortgages

Some lenders will also allow you to rent a property on Airbnb if you have a specific holiday let mortgage. This is provided you meet the eligibility criteria, which can involve earning above a certain income and only accessing loans within a specified price range.

Commercial mortgage

This could be possible if you are an experienced landlord with a large portfolio of properties. You may also need to look at a commercial mortgage if a portion of the property you plan to rent on Airbnb has a commercial aspect. This could include flats above a shop, pubs, bed and breakfasts, or guesthouses.

How to get an Airbnb mortgage

If you’re considering buying a property to rent on Airbnb, here are the steps you’ll need to go through:

1. Consult With a Broker: The first step in the process should be to speak to a broker who specialises in Airbnb mortgages. They can make the difference between getting a good deal and missing out on one. We’ll match you with an experienced Airbnb mortgage broker who will be able to guide you through the whole process.
2. Gather All Your Documents: You’ll need to ensure you have all the necessary documentation you need to hand, such as proof of income, identification and bank statements. You’ll want to download and review your credit reports to ensure there are no issues and create a business plan outlining the projected income you expect to earn from your Airbnb property.
3. Find the Right Lender: You can work with your broker to find the best lender who can offer you the most competitive rates and terms for your Airbnb mortgage. They will also help you fill out the application.
4. Meet the Deposit Requirements: You will need a deposit of at least 25% of the property’s value to be approved for a mortgage.
5. Prove Additional Income: Lenders often require you to have an income as well as your projected income from the Airbnb. You might have to demonstrate this with evidence such as payslips or bank statements.
6. Get Holiday Insurance: As cancellations can lead to a loss of rental income, you’re likely to need holiday home insurance. This will protect your investment and help you cover your mortgage payments during periods of low occupancy.
7. Fully Furnish the Property: You will need to ensure the property is fully furnished so it meets the expectations of holidaymakers. A well-furnished property is likely to attract more bookings and increase your projected rental income.

Eligibility criteria

The eligibility criteria can vary and will depend on what type of mortgage you use to start letting your rooms or house out on Airbnb. Here are a few examples of some of the key areas that could make a difference:

• Renting Out Rooms or the Whole House: This can potentially dictate your mortgage type. Even if you can rent on Airbnb, some lenders may still have restrictions such as the maximum number of days or rooms you can rent.
• Property Type: If you have a property with distinct or unique features, some mortgage lenders won’t accept the added risk of a ‘non-standard construction’ house being let on Airbnb. Depending on the property type, you may need to speak with a specialist lender to get a mortgage set up.
• Deposit: For a buy-to-let (BTL) Airbnb mortgage, you’ll likely need a larger deposit than a residential mortgage. Most BTL Airbnb mortgages have a minimum deposit requirement of 25%. Your broker may be able to find slightly lower deposit limits depending on your circumstances.
• Rental Coverage: This specifically applies if you take out a buy-to-let mortgage. You’ll have to show that you can generate enough income from the Airbnb rental to keep up with payments, usually around 125% to 140% of the monthly mortgage payment.

Mortgage lenders

Your choice of options will depend on the property and your Airbnb rental plans. That being said, here are some examples of major lenders who are open to the idea of offering a mortgage:

• Barclays
• Nationwide
• Swansea Building Society

The full range of choices can vary. For example, Santander, Natwest, HSBC, and Halifax won’t allow customers with a residential mortgage to rent on Airbnb. But, speaking with an experienced broker will reveal the exact lenders open to BTL, residential, or holiday let mortgages for Airbnb.

Can you change your existing mortgage to an Airbnb mortgage?

If you want to rent out either a room or your whole house on Airbnb, this will have implications for your mortgage. Don’t be tempted to do anything without talking to your lender first.

If you’re looking just to rent out a room while you’re still living in your home, your lender may agree to a ‘consent to let’, which means you can stay on your existing mortgage. Note there may be additional fees or a change in your rate when you do this.

If this isn’t an option then you’ll need to remortgage to either a different mortgage type with your existing lender or a new mortgage with a new lender. If you have a fixed-rate mortgage this may mean early repayment charges and your new mortgage may have different rates and terms.

How Online Mortgage Advisor can help you secure an Airbnb mortgage

This type of renting comes with lots of different rules and restrictions put in place by lenders. If you want to get set up with a mortgage for an Airbnb rental in the UK, your best option is to speak with a specialist broker.

We offer a free, broker-matching service. This means we’ll quickly assess your plans, and then pair you up with an expert broker who has extensive knowledge of Airbnb properties and mortgages.

Just call 0808 189 2301 or make an enquiry. We’ll set up a free, no-obligation chat between you and your ideal broker today.