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Airbnb Mortgages

15th November 2023

By James Jones

Airbnb mortgages make letting properties to holiday makers easier.

If you want to become a host for an Airbnb property, it is possible to secure yourself specific Airbnb mortgages. If it’s your first Airbnb there will be less lenders available but if you have owned buy to let property the choice increases. But don’t worry too much. there are specialist Airbnb lenders and brokers which can normally find you the right deal.

Making sure you prepare yourself properly in advance could help make the entire process of getting your mortgage much smoother:

The right property and paperwork

Do appropriate research. Make sure that you have a good idea on the property that best suits your circumstances. You will have to consider whether you want to rent out the entire property, or whether you are just renting out certain rooms within the property.

In addition, make sure you have all the necessary paperwork and information you need to aid you along the process (proof of address, proof of income and three consecutive months of bank statements.)

Your credit profile

Checking your credit reports alongside your credit rating. Doing this can help you make sure that your credit rating is accurate and up to date. In addition, removing any outdated information provides a more accurate result.

Rental assessment

Unlike a traditional buy to let property, you wont have a guaranteed tenant. Therefore research locally the likely letting rates and assumptions of how much you will reasonably get over a year in rent. A local letting agent will help with this and and an Airbnb / Holiday Let lender will ask to see it.

Talk to a specialist broker

Once everything is sorted out, then you can start talking to a mortgage broker that specialists in holiday let / Airbnb mortgages. They can help you with what mortgage type is best suited for you. Plus, they can guide you through the entire process. Naturally leading towards getting the best possible mortgage deal for you.

Holiday let Mortgage

In the past holiday let / Airbnb mortgages were hard to come by. Now they are a recognised growing sector of the market offering good returns for landlords.

With a holiday let mortgage, you can purchase a residential property that you can let out to tourists. As a result, your property can be turned into a business. The main benefit of holiday lets is that you can rent out a holiday home for a considerable amount more money than a conventional property rental. Plus, due to holiday let properties being classed as business, you can claim higher tax relief on the interest tied to the mortgage. In direct comparison to buy to let mortgages, the tax relief for buy to lets is lower than holiday let mortgages. Holiday let properties have to be available for at least 210 days annually.

Plan on using a residential mortgage?

You could use a residential mortgage in tandem with Airbnb but you must make sure you let your lender know what your plan is.

There could be an issue if you wanted to rent out your property, as most lenders could consider this a breach of the original mortgage rules. This is due to the fact that residential mortgages are purposed for homes that are supposed to be your primary UK residence. Residential mortgages are not a source for financial gain. You may have to alter your residential mortgage to a holiday let or a buy to let mortgage. In most cases you will need a specific type of mortgage.

This is a big decision to make so it would be recommended that you speak to Airbnb mortgage specialist to help you find what is right for you.

Commercial Airbnb Mortgages

If you are an experienced landlord with an expanded professional portfolio then you could be considered for a commercial mortgage. A commercial mortgage can be taken out to buy property or land for commercial use. Commercial mortgages are good for helping with property development and potentially raising capital to expand business. However they are intended for large or multiple properties. If you have just a few Airbnb houses, a separate mortgage on each should be fine. If you are moving more towards a block of Airbnb’s or multiple units a commercial mortgage might be a consideration.

Many brokers specialise in buy to let mortgages but don’t really offer commercial mortgages. You really want a a firm of advisers which does both.

How could I potentially achieve better interest rate on my Airbnb mortgages?

To help get better interest rates on your airbnb mortgage there multiple options that could help you in the long run:

  • Showing your affordability helps you secure better rates – evidence how the venture will be easily self funding.
  • Making sure that you understand what your lender is comfortable with in regards to the type of building your property is. Some lenders may not consider properties that are listed buildings, non standard, or unique.
  • Having a good credit history is key in mortgage applications and here is no exception. Results may vary with each individual lender as they may have different criteria for you to meet. 
  • Evidence experience in letting out property – buy to let is good, other Airbnb’s is better.
  • Evidence that you have other sources of income so you are not reliant on the Airbnb income to live.
  • The sum of money you put up for a deposit could also hurt your chances of getting better rates. The bigger you can get your deposit, the more security the lender has – the better your rate.

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