In This Article
What is an Airbnb mortgage?
An Airbnb mortgage can be taken when you buy or refinish a property you let out on short-term agreements. For example, renting it out nightly on the website Airbnb.
A mortgage would not necessarily be branded as an Airbnb mortgage, rather it would be considered a holiday let product.
These products allow the owner to market their properties on portals such as Airbnb to people requiring short term accommodation. For instance, this could be a flat in a city that people use for city breaks.
Standard buy to let mortgages do not allow this type of rental agreement and insist on longer-term tenancy agreements, such as 12 months.
Airbnb mortgages are underwritten in a different way to buy to let mortgages, often calculated on the holiday let income over the seasons.
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How much can you borrow on an Airbnb mortgage?
With an Airbnb mortgage for a holiday let property, you can usually borrow as much as 75% of the property’s value subject to the expected rent generated over the year.
Some lenders that lend on Airbnb mortgages will calculate the income over the different seasons, working out an average across the year.
Other lenders will use a standard buy to let stress test treating a property if it would be let on a conventional assured tenancy agreement.
If it passes the stress test, the lender can offer a holiday let mortgage.
The reason that they do this is that it is not uncommon for somebody to rent out a property on Airbnb for some time before deciding to put a tenant in on a longer term basis.
This is usually to cut down on the amount of work needed throughout the year when running an Airbnb property.
Do you make more money renting out a property on Airbnb than with a standard buy to let?
The reason that investors usually rent a property on Airbnb is that the yields are often higher than what they would be with a standard buy to let property.
Airbnb rates are calculated on a nightly basis so if the property is occupied for the majority of the time, this usually leads to a higher income than with a standard buy to let.
However, this income is not usually passive. When you rent out an Airbnb property, it will need to be furnished to attract visitors.
As a result, you will likely need to pay for replacement goods throughout the year.
In addition to this, the property will need to be regularly cleaned due to guests coming and going.
Some agents can arrange this but the rate to manage an Airbnb property is usually higher than a standard buy to let due to the extra work involved.
It may be harder to predict your annual income from an Airbnb property as it is dependent on the holiday market and whether your property is attracting regular guests.
Is an Airbnb mortgage more expensive than a standard buy to let mortgage?
Airbnb mortgages and holiday let mortgages are usually more expensive than standard buy to let products.
The reason is that lenders see these as higher risk than properties with long-term tenants.
This is due to a constant flow of people using the property who may not have the same regard for it as if it was their own permanent home.
This is not always the case of course but it is factored in when lenders calculate their products.
An experienced mortgage adviser will be able to tell you the difference in monthly payments and charges for both buy to let properties and holiday let properties.
Can a limited company get an Airbnb mortgage?
A limited company can get a mortgage on an Airbnb property.
The company will likely need to be a Special Purpose Vehicle (SPV) which is in place to buy and rent out residential properties. Read up on Limited Company BTL Mortgages here.
Not all lenders will offer buy to let mortgages to limited companies so make sure that you find a mortgage adviser that can give you your options.
Limited company Airbnb mortgages may be more expensive depending on the mortgage lender.
Your mortgage adviser will be able to confirm this.
Can you get an Airbnb mortgage with bad credit?
It is possible to get an Airbnb mortgage if you have bad credit.
Not all lenders that lend on Airbnb properties will lend to people with bad credit so finding a mortgage adviser with experience in both areas would be prudent.
Bad credit can come in many different formats. This may include arrears, defaults, debt management plans, previous property repossessions, bankruptcies and more.
Your lender would need to understand what the bad credit was (for example, a bankruptcy) when it took place, how much you are owed, and whether it is now been settled.
With this information, they would be able to confirm whether they could consider an application for your Airbnb property.
Make sure that you tell your mortgage adviser full details of any adverse credit that you have had. To find out more about your credit history, you can go to Check My File and sign up for a free trial.
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Can you use the property if you have an Airbnb mortgage?
If you have a property with an Airbnb mortgage or holiday let mortgage, lenders will usually allow you to use the property for a small period each year.
This will vary on the lender’s individual rules, however, an example of a time that some lenders permit is 30-days use.
If you were to use the property for half of the year and rent it out for the other half of the year on Airbnb, you will likely be in breach of your mortgage terms. You can ask a mortgage adviser to confirm this.
I have a residential mortgage. Can I let my property out on Airbnb?
If you have a property with a residential mortgage on it, there is a good chance that your lender will not allow you to rent it out on Airbnb.
Many lenders can agree to ‘consent to let’ in certain situations but this does not usually include holiday let use.
If you have a residential mortgage and are thinking of doing this, you need to speak with your lender that can confirm their stance as having the wrong mortgage or insurance on the property could be very costly.
Do you need a certain mortgage broker for an Airbnb mortgage?
Airbnb mortgages and holiday let mortgages can be more considered complex mortgages as they are more involved than standard buy to let products so make sure you find a mortgage adviser that has experience in arranging these.
Different mortgage advisers have different areas of expertise.
For example, a mortgage broker that specialises in bridging finance may not be so up-to-date on lifetime mortgages.
You should ask your broker if their experience is relevant to your individual transaction.
Conclusion
It is certainly possible to get mortgages for properties that are on Airbnb. These mortgages would come under the umbrella of holiday let products.
Some holiday let mortgages allow you to use your property for a certain amount of time each year in addition to renting it out to holidaymakers.
If you are thinking about an Airbnb mortgage, it is recommended to look for an experienced mortgage adviser that arranges holiday let mortgages.
If you would like I NEED ADVICE to match you with an experienced mortgage adviser with knowledge of the holiday let market, please complete the contact form.
They are experienced, which can boost your chances of being approved.
