Understanding your mortgage options to become an Airbnb host
Helping you buy the house or holiday
home you really want.
There is no denying that Airbnb has taken off considerably in the last few years. It is now easier than it ever has been to let out a property to holidaymakers. If you are interested in investing in a property for the purpose of letting it out to this group of people, then you may be thinking about what sort of mortgage is going to be the most suitable for you.
Can you get a mortgage for an Airbnb property?
Yes, you are able to secure a mortgage if you are looking to purchase a property for the purpose of advertising it on Airbnb and becoming an Airbnb host. Nevertheless, there are some important points that need to be considered from the outset. This includes the following:
- For how many weeks (roughly) during the calendar year is your property going to be available for rent on Airbnb?
- Do you already have a mortgage with an existing lender? If so, you may need to get their ‘consent to let’ before you become a host on Airbnb.
- Do you want to make the full property available to rent out or are you only going to make one room or several rooms available?
These are all factors that need to be considered, as there are different rules for hosts on Airbnb, depending on the sort of mortgage they need and the provider you approach in order to borrow.
All of these points can vary from lender to lender, which is why specialist assistance is so critical, and that is exactly what we are here to help you with, so don’t worry if you have found these questions a little bit overwhelming – we will help you to navigate the mortgage process every step of the way.
What type of mortgage is most appropriate?
The most appropriate type of mortgage is often a holiday let mortgage. These are mortgages designed for properties to be rented out on a short term basis with new mortgage products being available with AirBnB hosts in mind.
Holiday let mortgage applications are reviewed based on the commercial potential of the property and the AirBnb income that can be derived.
What about a buy to let mortgage for Airbnb properties?
If you are searching to purchase a property with the purpose of renting it out via AirBnB, a buy to let mortgage could be suitable in some instances.
The vast majority of lenders may consider Airbnb-type lettings on buy to let mortgages, yet there tends to be restrictions placed on these properties in terms of the duration it is available for rent. For example, some may allow up to 90 days, others may allow longer, with some lenders even allowing as long as six months. If you would like to find out more about these sorts of mortgages, please do not hesitate to get in touch with us for more details.
I already have a residential mortgage, can I be an Airbnb host?
This is a question that we often get asked, and yes, it is definitely possible. However, you do need to make sure that you get in touch with your current lender and inform them of the situation. This is important because most lenders require their consent for an Airbnb-type letting.
Most lenders might deem renting out your entire property on Airbnb a breach of the mortgage rules. This is because residential mortgages have been designed so that these properties are used as your main residence in the UK, rather than an investment property to make money from in the rental market.
If you plan to rent an entire property out, you may be required to change your mortgage to a buy-to-let or holiday let mortgage. However, this is certainly something that we will be able to advise on.
Nevertheless, if you aim to rent out only one of the rooms in your home using the Airbnb platform, the vast majority of lenders may deem this similar to taking in a lodger, and so the likelihood is that this may be permitted. Again, this is something that we would be more than happy to advise and assist on.
I already have a commercial mortgage, can I be an Airbnb host?
As the name indicates, a commercial mortgage is designed for the purpose of borrowing money for a commercial property that is used for day-to-day business activity. Because of this, Airbnb hosts can only use these sorts of mortgages in very specific situations.
For a professional landlord that has a big portfolio of property, you may be able to locate a provider that is going to consider a commercial mortgage for your property that you intend to let out on Airbnb. However, this does depend on the strength of your application, which is why it is important to work with a professional that can assist you with the process.
Advice on getting the best mortgage rate for your Airbnb listing
There are a number of different steps that you can take in order to give yourself the best chance of securing the best possible rate on your Airbnb mortgage. You need to understand the different factors that can influence your interest rate.
Firstly, you have the property type. Every lender is different. However, there are some lenders that do not accept properties that are listed, unique, or non-standard in any way. This is because they view these properties as higher risk and they are fearful that they may be difficult to sell in the future.
Aside from this, two of the main factors that may determine the mortgage rates you are offered are the size of the deposit you put down and your credit history.
Your deposit is going to influence the interest rate you are going to receive for the mortgage, especially when this is for a new venture, like an Airbnb rental house or flat. The bigger the deposit is that you can offer, the better rate of interest you are likely to receive, as this provides more security and comfort for the lender.
In terms of credit history, you are going to struggle to secure an Airbnb mortgage if you have a poor credit history. There are different rules in place regarding this, depending on the lender.
If you have bad credit, you may be offered a mortgage yet it may be at a higher rate. Some lenders, though, may not offer applicants a mortgage if their credit rating is poor. The best thing to do is give us a call and we can provide you with our expert advice based on your personal situation.
How does Airbnb listing affect my existing mortgage?
As we have discussed, it is important to make sure you get in touch with your lender to inform them that you already have a residential mortgage if you are thinking about using your property as an Airbnb host. You may need to prove that your intention originally was to live in the property, rather than rent it out. In most cases, lenders will prove consent to let in exchange for an arrangement fee.
Furthermore, they could decide to raise the rate of interest to take account of this charge. It is important to note that you may be in breach of the terms and conditions of your mortgage contract if you make the full property available on the Airbnb platform. If this were to happen, your lender may ask for the loan to be repaid in its entirety, so it is really not worth the risk.
Is the mortgage interest tax for my Airbnb listing deductible?
You may be wondering whether or not you are going to be able to deduct the tax from your mortgage payments on the rental property you are listing with Airbnb. It is possible, and there are a number of other items that could be deductible. This includes insurance, rental commissions, cleaning costs, and rent.
Is it possible to fund an Airbnb rental property with a second home mortgage?
Yes, there are a lot of people that use second home mortgages in order to buy an investment property for rental purposes, whether it is going to be listed on Airbnb or not. However, most mortgage lenders are going to use a different view in order to determine your affordability. The viability of the investment is likely to be their main concern.
So there you have it: everything that you need to know about getting an airbnb mortgage. If you have any queries about this, or you would like some further help, or you are ready to start the process of applying for a mortgage, all you need to do is give us a call today and we will be more than happy to get the ball rolling.
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