Airbnb has become a popular way for people to let out a room or property for a flexible income stream, along with other websites that let you list and advertise your property for a short term. If you're thinking of renting a property out through Airbnb, it's important to make sure you have the right mortgage type. You’ll need to take out a mortgage that suits what you intend to do with the property you’re purchasing – e.g. a holiday let mortgage would allow you to let out your property on a short-term basis. There are also options if you want to change the purpose of a property you already have a mortgage on.

When buying a property to rent through Airbnb, consider the tax implications of holiday rentals, especially with changes happening to rules around second homes and rental properties.

In this guide, we’ll look at how you can get a mortgage for an Airbnb property. We’ll also explain any complications that can arise based on the type of property, as well as things you should know before buying a holiday let. For complex mortgage types, it's always recommended to use an experienced mortgage broker who can help you get the right type of mortgage.

Can You Get a Mortgage on an Airbnb?

It is possible to get a mortgage for an Airbnb property, but not all lenders will offer mortgages on this type of let. There are other elements that can make it more complicated to get a mortgage, such as what type of house or flat you want to buy, or concerns over affordability.

If you want to buy a property to start offering rentals through Airbnb or a similar website, your options include holiday-let type mortgages. However, there’s also a growing acceptance of short-term letting amongst buy-to-let lenders and residential lenders. These obviously come with a few caveats which we’ll explain in this guide.

Mortgage options for an Airbnb include:

  • Holiday let – a product that allows people to own a second home that they want to let out on a short-term basis
  • Buy-to-let mortgage products that allow short-term lets outside of AST (assured tenancy agreement)
  • Normal residential mortgage – this would only be an option if you plan to continue living in the property and want to let out a room on a short-term basis, or you plan to continue living in the property the majority of the year and only let it out for short periods of up to a total of 90 days per year
  • Residential mortgage with consent to let – this would only typically be an option if you already have a residential mortgage on a property but you later want to let out the property for more than 90 days per year and will no longer be living in it yourself

We go into more details about this mortgages below.

Holiday Let

A holiday let mortgage is for people who essentially want to have a second that they can use themselves and let out on a short term basis to generate extra income. Holiday let products are typically on an interest-only basis.

It’s best to use a broker like John Charcol if you want a holiday let mortgage product because each lender assesses applications for holiday lets differently. None of them have the same criteria, which means it’ll be difficult to find a suitable lender for your circumstances without any expert help. Our advisers will learn about your requirements and your intentions for the property and use this information to pair you with a lender whose criteria best lines up with your situation.

Residential Mortgage with Consent to Let

A residential mortgage with consent to let will only be suitable for you if you have a residential mortgage on a property you no longer intend to live or stay in and instead want to let out to a tenant for more than 90 days.

It’s unlikely a lender will grant you consent to let every year, so if you intend on letting out your property in this way for the foreseeable future then you’ll need to remortgage onto a new product.

To apply for consent to let you must contact your lender.

Buy-to-Let Mortgage for Airbnb

Buy-to-let mortgages are designed for rental properties and are usually interest-only mortgages.

Typically buy-to-let mortgages are for properties that you intend to rent to the same occupant for a significant amount of time — usually a minimum of 6 - 12 months. These operate on an AST (assured tenancy agreement basis), which means the property is rented to a tenant for a fixed term (6 - 12 months) or on a period/rolling (often monthly) basis. Consequently, this means that most buy-to-let mortgages are not suitable for Airbnb properties which are often let out to different tenants for much shorter periods of time.

There’s a small handful buy-to-let mortgage lenders that do lend on short-term lets however. These lenders allow short term lets outside of ASTs (assured tenancy agreements). Because not many lenders offer these types of buy-to-let products, you’ll often find that you’ll need to use a mortgage broker to source a suitable product. Furthermore you’ll likely find your options limited.

Normal Residential Mortgage

If you already have a residential mortgage on your home, but you recently decided that you want to let out a room in your home on Airbnb to generate some extra cash or you want to live in the property the majority of the time and only let it out for up to 90 days per year, then you may find that you won’t have to change your mortgage product at all.

As you’re only renting out the property on a short-term basis – e.g. for under 7 days – then there will be no need to change the terms of your mortgage.

It’s still recommended that you contact your lender to ask them about their conditions regarding short term letting of your residential property.

If you’re unsure then speak to one of our advisers on 0330 433 2927 and they can explain your options.

Do I Need a Commercial Mortgage for Airbnb?

You wouldn’t ever need a commercial mortgage for an Airbnb property. Airbnb mortgage products typically come under the buy-to-let umbrella, rather than the commercial one. This is because they’re still technically residential as you’re renting to a tenant – not a business. Finding an Airbnb non-commercial mortgage is generally simple.

Why Don't All Mortgage Lenders Offer Mortgages for Airbnb Properties?

Holiday lets, or short-term lets in general, can be harder to get a mortgage for compared to either residential or standard buy-to-let mortgages. This is because Airbnb is a relatively new way of renting out holiday properties and some lenders are still concerned about the risks involved and how to accurately assess the expected rental income.

Can I Turn My Residential Property into Airbnb?

You may be able to turn a residential property into an Airbnb if:

  • You’re only renting out a room on a short term basis and therefore do not need to declare this to your lender
  • You’re living in the property for the majority of the year and only rent it out for up to 90 days per year
  • You get consent to let from the lender and let out the whole property for more than 90 days

How Do Mortgage Lenders Know if You're Doing Airbnb?

Always tell your mortgage lender if you start offering rentals through Airbnb or any other rental avenue. There are various ways your mortgage provider can find out that you are on Airbnb and, if you have not told them, you can be faced with repercussions for breach of contract.

Can I Use My Buy-to-Let Property for Airbnb?

Unless you’re with a buy-to-let lender that allows short term lettings already, then you’ll have to remortgage onto a suitable product if you wish to rent out your property on a short term basis.

How Is Affordability Calculated for an Airbnb Mortgage?

Affordability is calculated in different ways by different mortgage lenders.

Holiday let lenders will either assess your affordability using the expected market rental income as with a normal buy-to-let mortgage or they will look at averages of the high, medium and low rental seasons.

Buy-to-let lenders that allow you to let out the property on a short term basis will assess your affordability based on the expected market rental income as with a standard buy-to-let mortgage.

The lender won’t need to reassess your affordability if you’re on a residential mortgage with consent to let. However, if you later remortgage onto a new product then the new lender will assess your affordability.

What Do I Need for an Airbnb Mortgage?

As for any other mortgage type, you’ll need general personal information - including proof that you meet a lender's eligibility criteria. This can easily be checked with individual lenders.

Consider also the required deposit amount and appropriate insurance.

Deposit for Airbnb Mortgages

The minimum deposit for buy-to-let and holiday let properties is often around 25%, though every mortgage lender offers different amounts. This is for standard buy-to-let or holiday let properties, but if there are additional considerations for your chosen Airbnb property, then the minimum deposit required could increase. Additional factors include construction type, location, size and more.

Insurance for Airbnb Mortgages

Getting suitable insurance is vital for a mortgage application as it’s a requirement for mortgage lenders.

Getting insurance and a mortgage for an Airbnb rental property is typically simple, but it will often cost more than a typical buy-to-let insurance policy. This is because of the increased risk of damage to the property from having different people rent it out frequently. You should make sure that you can get appropriate insurance for your Airbnb property before you consider applying for a mortgage.

Can a First-Time Buyer Get an Airbnb Mortgage?

A first-time buyer can get a mortgage for an Airbnb property but they’ll often find their mortgage options even more limited. Speak to a member of our team to find out what products are available to you.

Other Options to Purchase a Property for Airbnb

If you’re unable to get a mortgage for a holiday let Airbnb, you may be able to remortgage your home to release funds to buy the holiday let outright

Remortgaging for Airbnb

If you have a primary residence or another property without a mortgage, you could remortgage it in order to secure the funds. However, this means that the property you own would be the security for the mortgage, so if you default on mortgage payments, your home could be repossessed.

How Can a Specialist Mortgage Broker Help with an Airbnb Mortgage?

An independent mortgage broker like John Charcol can help you get the right kind of mortgage for a property you intend to let out through Airbnb.

Our advisers will make sure that you get the most suitable deal on your mortgage even if it’s a complex situation. Some lenders do not deal directly with the public, so you’ll need to go through a broker to have access to the best mortgage options.

Here at John Charcol, we have mortgage brokers with experience in Airbnb and holiday lets. Get in touch today to see how we can help you get the right type of mortgage for your needs.

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