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Mortgages for Airbnb Properties

Key information you need to know about Airbnb mortgages in the UK.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 5th November 2019 *

Letting properties out to holidaymakers is now easier than ever thanks to Airbnb. If you’re looking to tap into this property rental market, you may be wondering what type of mortgage is most suitable in these circumstances, and what factors could impact your chances of financing your Airbnb property. 

In this article, we’ll be covering the following:: 

If you’d like to know more about mortgages for Airbnb properties, make an enquiry. We’ll match you with a broker who can help for free!

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Can I get a mortgage for an Airbnb property?

In principle yes, it’s possible to secure a mortgage if you would like to become an Airbnb host in the UK. However, there are some important points that you should consider from the outset, such as:  

  • Are you looking to make your entire house available to rent or just particular rooms?
  • If you already have a mortgage with an existing lender, do you need their ‘consent to let’ before becoming an Airbnb host?
  • For how long during a calendar year will your property be available to rent on the Airbnb platform?     

There are different rules for Airbnb hosts depending on the type of mortgage you require and which provider you approach for borrowing. All of these points may vary from lender to lender as outlined in the sections below. 

What type of mortgages are available for Airbnb properties?

The type of mortgage you can use on Airbnb properties largely depends upon your intentions as a host. 

Can I be an Airbnb host if I have a residential mortgage?

Yes, it’s certainly possible. In the first instance you should inform your existing lender, as most residential mortgage providers do not allow Airbnb-type lettings without giving prior consent. 

If you want to rent out your entire property on Airbnb, most lenders may consider this a breach of the original mortgage rules. This is because residential mortgages are designed for homes meant to be used as your primary UK residence rather than for making money from. 

You may even be required to change your residential mortgage to a buy to let one if you plan to rent your entire property out, though you may want to talk to an expert before making a big financial decision.  

However, if your intention is only to rent out one of the rooms in your house on the Airbnb platform, most lenders would consider this similar to taking in a lodger and would likely allow it as the owner would still be in the property.  

Do you need a buy to let mortgage for Airbnb properties?

If you’re looking to buy a property with the sole intention of renting it out, whether on Airbnb or not, a buy to let mortgage (BTL) is usually the most appropriate form of lending for this purpose. 

Most lenders will consider Airbnb-type lettings on buy to let mortgages with a restriction placed on the duration the property is available for rent during a calendar year. Some may allow up to 90 days, and a few will allow up to 16 weeks or even six months. 

For more information about BTL mortgages for Airbnb properties, make an enquiry so we can introduce you to the right broker.

Can I be an Airbnb host if I have a commercial mortgage?

As the name suggests, the main purpose of commercial mortgages are to provide borrowing on commercial premises for day-to-day business activity.  In this regard, they are only viable for Airbnb hosts in very specific circumstances. 

For professional landlords with large portfolios, it’s possible that a provider may consider a commercial mortgage for an Airbnb property, depending on the strength of the application. Make an enquiry to discuss this further with a mortgage expert.

Can I use a holiday let mortgage for an Airbnb property in the UK?

Yes, it’s certainly possible. In fact, holiday let mortgages are regarded by some lenders as the most appropriate form of lending for Airbnb-type lettings as they’re usually rented out on a short-term basis. Most new holiday let-type mortgages are now being launched with Airbnb hosts in mind. 

If you’d like to know more about what type of mortgages would best suit an Airbnb property, get in touch and we can arrange for a specialist to discuss this with you in more detail. 

How does Airbnb affect my existing mortgage?

As outlined in the section above, if you have an existing residential mortgage, you must inform your lender if you decide to use your house as an Airbnb host. You may be required to prove that your original intention was to live in the property rather than rent it out. 

Most lenders will charge an arrangement fee to provide a ‘consent to let’. In addition, they could also raise the interest rate to take account of this change. 

If the entire property is made available on the Airbnb platform, this could result in a breach of the mortgage contract terms and conditions. In such circumstances, the lender may ask for the loan to be repaid in full. 

Can I use Airbnb rental income to pay off my mortgage?

Yes, it’s possible. The key aspect of using Airbnb rental income to pay off your mortgage is being able to provide sufficient evidence that will prove the level of income can adequately cover what is required. 

Most lenders will want to see a track record of payments over three years; some may require two years, and a few may accept less than twelve months. 

For Airbnb hosts, lenders may pay closer scrutiny to the amount of income expected as rentals are typically on a short-term basis. Therefore, they may seek evidence of other income (for example salary, pension and investments) to be sure the mortgage payments are covered. 

Which mortgage lenders allow Airbnb properties? 

The number of mortgage providers who now provide financial support for Airbnb properties is certainly growing as the popularity of the platform continues to blossom across the UK. At the time of writing, the latest figures suggest that there are over 223,000 UK Airbnb listings). 

The terms and types of lending available will vary from lender to lender, which is why most people use the services of an independent advisor to help them search the market. 

If you’d like to know which lenders can offer the most competitive deals for Airbnb hosts, make an enquiry. We can arrange for a specialist to get in touch for a free, no-obligation chat.

How to get the best Airbnb mortgage rates

To secure the best rates for an Airbnb mortgage, it’s important to be able to show strong evidence of affordability. The track record of rental income from your property will also be crucial. 

The more you can prove that the repayments can be adequately covered through your income, the stronger the likelihood that you will attract lenders offering the most competitive rates. 

Other factors that can influence the interest rate are: 

Property type 

Every lender is different, but many don’t accept property that is non-standard, unique, or listed. This may be because they fear the properties are higher risk and could be harder to sell in the future. 

That said, there are lenders who are happy to consider a wide range of property types. For more information on this, read our non-standard property guide or make an enquiry

Credit History

A poor credit record will likely have a detrimental effect on your Airbnb mortgage application and certainly influence the interest rate you may have to pay. This will vary from lender to lender as they all adopt different rules. Some lenders will not accept such applications whereas others will consider them depending on the circumstances. 

For more information on this see our bad credit information section. Or make an enquiry and we’ll refer you to one of the brokers we work with for the right advice.

Deposit

The size of your deposit will also influence the interest rate you’ll get for a mortgage, particularly one for a new venture such as an Airbnb rental property. The higher the deposit you can provide, the better the interest rate will be, as this offers more comfort and security for the lender. 

Frequently asked questions

Got a question about Airbnb mortgages that we haven’t answered yet? See if you can find your answer in one of the topics below. 

Can I use a second home mortgage to fund an Airbnb?

It’s perfectly possible to use a second home mortgage to buy a property you want to rent out through Airbnb. Although most mortgage lenders will assess your affordability in a different way. Their primary interest will be the viability of the investment.

You can learn more about how a lender might assess an application for a second home mortgage for rental purposes in our second home mortgage guide.

Can I use a mortgage calculator for my Airbnb?

Many websites and mortgage lenders offer customers online mortgage calculators, like this buy to let mortgage calculator we have hosted on our site. 

These can be a really useful tool when you want to get a rough idea of how much you might be able to borrow or what you might expect to have to pay each month for a particular property you like. However, mortgage calculators like this are based on different algorithms and can’t offer you a reliable or precise answer.

For an accurate idea of what mortgage you could really get, make an enquiry and talk to one of the experts we work with. They will be able to answer all your questions and tell you what mortgage you could get and how much repayments would cost you based on real mortgage rates.

What are typical Airbnb incomes? 

Typical Airbnb incomes will vary depending on the property, location and how often they are available. However, an insight report produced by the platform in 2018 suggested the average annual earnings for a host was just over £3,000. 

Is my Airbnb mortgage interest tax deductible?

It’s possible that you may be able to deduct tax from the mortgage payments you make on your Airbnb rental property.

Other deductible items might include:

  • Rent
  • Cleaning costs
  • Rental commissions
  • Insurance.

To find out more you should seek tax advice or make an enquiry and talk to one of the advisors we work with.

Can I get a mortgage for an Airbnb in Scotland?

Although there’s no real reason you shouldn’t be able to get a mortgage for an Airbnb property in Scotland, you may find yourself subject to ruling around renting property out during the Edinburgh Festival. If this is your intention, it would be wise to make sure you can achieve what you hope to, ahead of committing to any investment plans.

What happens if I encounter an Airbnb fraud problem?

As long as you get agreement from your mortgage lender to rent your property out to Airbnb tenants and can keep up with your mortgage repayments, any problems you have with your rentals shouldn’t affect your mortgage.

However, if your problems or fraud issues affect your ability to meet your repayments, and if this led to you defaulting on your mortgage, you could find yourself exposed and end up in a bad credit situation.

To avoid this, make an enquiry and talk to one of the expert advisors we work with. They will talk through your plans and make sure you get a mortgage you can afford, which could make the difference between success and failure.

Do UK lenders offer mortgages for overseas Airbnb properties? 

Most major UK lenders will likely have operations overseas that can provide local knowledge and expertise on a range of banking services, including mortgages for Airbnb properties outside the UK. 

If you’re interested in becoming an Airbnb host and would like to know more about the type of mortgages available, whether in the UK or overseas, make an enquiry. We will then arrange for a mortgage advisor with experience in Airbnb properties to get in touch.

Where can I get the right advice for Airbnb mortgages? 

If you’re interested in becoming an Airbnb host and want to speak with someone who can offer specialist advice about Airbnb mortgages, call us on 0808 189 2301 or make an enquiry.

The advisors we work with have a wealth of experience in areas such as this and deal with customers in your situation all the time.

Updated: 5th November 2019
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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