Airbnb Mortgage (A complete guide)

In this brief guide, we are going to discuss if an “Airbnb mortgage” will be the right thing to get when considering using your home as an Airbnb. 

Most buy to let mortgage lenders will charge you a higher rate and more fees if you were to use your buy to let mortgage on an Airbnb so just what mortgage will be sufficient for an Airbnb so you are not in breach of your buy to let mortgage but there are some mortgage lenders that will offer you a form of an Airbnb mortgage.

Property data shows that the average monthly rent for a one-bedroom flat in London is now £1,618 but the same flat can earn £1,618 on Airbnb in 2 weeks.

Data shows that Airbnb hosts earned over £657m from Airbnb in 2016/2017 with each host earning on average £3,000 and many of the Airbnb lets being one bedroom.

Worse of all anyone renting their property through Airbnb may not be covered by their insurance if anything goes wrong. Most Airbnb hosts believe they are sufficiently covered by Airbnb’s third-party Host Protection Insurance and accidental-damage Host Guarantee cover.

In reality, they aren’t covered and this will mean they are in breach of their mortgage agreement.

If you are planning to rent your home for more than 90 days a year via Airbnb You will require planning permission for short term lets.

This rule is limited to rentals in the Greater London area whilst other cities in the UK do not have this limitation.

Airbnb mortgage

Most Airbnb properties are let out seasonally and in some cases, this could be the whole home whilst in other cases, it could be a room in the home.

The issue here is that most mortgage lenders do not allow you to rent out your whole house as it can be considered a buy to let and hence you will be violating the terms of your residential mortgage. 

If you violate the terms of your residential mortgage then the mortgage lender could penalise you with huge fees. They could also switch your mortgage to a buy to let mortgage at a much higher rate or even worse they could call in the mortgage. This will mean you will have to repay and settle the mortgage in a given time.

To avoid this you should usually get a buy to let mortgage when looking to rent out your property. Buy to let mortgage will have a different mortgage affordability criteria and will be suited for an Airbnb. 

The issue is that until recently there weren’t many mortgage lenders offering an “Airbnb mortgage”.

You can usually take a lodger in without having to inform your mortgage lender but to do anything beyond this you will need the mortgage lenders consent to let. You can also use the rent a room scheme to rent out a room in your home with your mortgage lenders permission. This means you could earn up to £7,500 tax-free.

Most mortgage lenders which consider some sort of  Airbnb mortgage will judge your mortgage affordability based on what income you will earn from an assured shorthold tenancy agreement. This is the case even if you plan or anticipate to earn way more with an Airbnb rental. 

This way mortgage lenders feel secure that if anything goes wrong with your Airbnb you can always convert back to an assured shorthold tenancy with your buy to let mortgage and still be able to afford the mortgage.

Most Airbnb mortgage lenders may also require the below:

You may be able to apply as a business or a private individual

The property can be let on a holiday let or Airbnb basis

Applicants will usually need to have at least one buy to let property already

No minimum income requirements

Lending to 75% LTV

You may be able to get an Airbnb mortgage with minor credit issues

What is Consent to let?

Consent to let s essentially when you get approval from your mortgage lender to rent out your home which is on a residential mortgage. Without getting consent to let you may be in violation of your mortgage agreement. You will usually want t get the consent to let in writing to avoid having any issues in the future.

Before most mortgage lenders will give you a “consent to let” they will want to be satisfied that you didn’t plan to rent out your home when you initially bought it and in some cases there may be a small rate increase as well as a mortgage arrangement fee charge.

Airbnb mortgage lenders

The below mortgage lenders will offer you some form of an Airbnb mortgage:

Mortgage lender	Airbnb mortgage notes
Virgin mortgages	They may be willing to offer an Airbnb mortgage with a buy to let mortgage but you will need to get prior written consent
Santander mortgages	They may be willing to offer an Airbnb mortgage with a buy to let mortgage but you will need to get prior written consent
Royal Bank of Scotland mortgages	They may be willing to offer an Airbnb mortgage with a buy to let mortgage but you will need to get prior written consent
Lloyds bank mortgages	Yes but for a maximum of four months annually
Metro bank mortgages	Yes but for a maximum of three months annually
Tipton & Coseley Building society	Check with the mortgage lender
Foundation Home Loans	Check with the mortgage lender
Principality mortgages	Check with the mortgage lender
Leeds Building Society	Check with the mortgage lender
Dudley Building Society	Check with the mortgage lender
Newbury Building Society	Check with the mortgage lender
Harpenden Building Society	Check with the mortgage lender
Precise mortgages	holiday let mortgage which can be used as an Airbnb mortgage
Paragon mortgages	holiday let mortgage which can be used as an Airbnb mortgage

There may be other mortgage lenders who offer or allow an ”Airbnb mortgage”. Check with your Airbnb mortgage broker.

Using a mortgage broker for your Airbnb mortgage

You may want to consider using an independent mortgage broker to get a mortgage.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. 

This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. 

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we discussed the Airbnb mortgage. If you have any questions or comments please let us know below.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.