Getting an Airbnb Mortgage
Looking to buy and then rent a property on Airbnb? Here’s how to set up the right type of mortgage and what to watch out for before you list your home.
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?
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What type of mortgages can you use for Airbnb?
The type of mortgage applicable for Airbnb use will depend on the property in question, your circumstances and the lender you deal with. Here’s a quick breakdown of some potential options that could apply:
Buy-to-let (BTL) mortgage
This 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.
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 out 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.
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
Your first step should be to get in touch with us. We’ll match you with an experienced Airbnb mortgage broker who will be able to guide you through the whole process.
Your broker can help you:
Work out your potential rental income
It’s advisable to have a rough idea of your earning potential through Airbnb as this can help convince mortgage providers that you’re a safe bet to lend to.
You can do this by working out the number of days your property will be available to let during a full year and multiplying this by your nightly rate. You will then need to factor in the cleaning costs, utilities, insurance, property management fees and host fees to get a full picture of the property’s profitability, estimating any of these that you’re unsure about.
If this sounds daunting then don’t worry, your broker can guide you through these calculations.
Decide what type of mortgage you need
We’ve touched already on the types of mortgage that might be applicable to an Airbnb rental, but it can be hard to know for sure which is right for you without expert guidance. Your broker can help here. They’ll look at your rental forecasts along with how much of the house you want to rent out and how often, and help you decide which mortgage is right for you.
Gather your documents
Get together your ID, proof of address, and documents detailing your income history.
If you have an existing residential or buy-to-let mortgage, gather up any relevant paperwork relating to your property. Your broker will be able to tell you exactly what information you’ll need to provide around your rental goals.
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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 which type of mortgage you go for. 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 be willing to 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 for 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 do 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.
Calculate your mortgage payments
Simply enter the rental property value, deposit, anticipated monthly rent, interest rate, mortgage term and our calculator will do the rest.
Capital and repayment:
Loan to Value ratio (LTV):
Most lenders won't offer Airbnb mortgage calculator over a LTV of 80%.
Interest Cover Ratio (ICR):
Most lenders require rental income to be at least 125%-145% of the interest repayments for a Airbnb mortgage calculator.
Get started with a specialist buy-to-let broker to find out how much they could help you save on your monthly mortgage repayments.
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:
- 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-term mortgage this may mean early repayment charges and your new mortgage may have different rates and terms.
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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.
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Increase your chance of approval with an expert in Airbnb property mortgages
This is not usually possible as you’d have to repay any Help to Buy equity loan assistance before you can engage in any kind of subletting of the house.
Potentially, if it meets the criteria. It needs to be available as a furnished holiday let for at least 210 days of the tax year, actually let for at least half of these, and continuous lets of over 31 days must not add up to more than 155 days in the year.
If you don’t tell your lender then you may be in breach of your mortgage terms and conditions. In this case, your lender could take action, potentially either asking you to repay your mortgage in full or repossessing your home.
Mortgage rates are all about risk. Lenders mitigate the higher risk inherent in short-term lets like Airbnbs by charging higher interest rates.
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