Mortgage lenders that allow Airbnb (+3 insights)

In this brief guide, we are going to discuss Mortgage lenders that allow Airbnb rentals.

As Airbnb has grown in demand so many borrowers are now much keener to gain an extra income from it by renting out their residential properties when they are out of town on holiday or on business.

This has, in turn, caused a lot of mortgage lenders to begin catering for Airbnb mortgages by allowing borrowers to rent out their residential homes for a limited period.

In the past renting out your residential property which would have been secured on a residential mortgage would have been a breach of your mortgage agreement and could have made the mortgage lender “call-in” the mortgage early.

However, given the rise of Airbnb and the numerous mortgage lenders who noticed borrowers blatantly flouting their mortgage agreements, some provisions were made to allow borrowers to begin renting out their properties for a minimum time in what is now styled as an Airbnb mortgage.

Mortgage lenders that allow Airbnb

Below are a list of mortgage lenders that allow Airbnb rentals on your residential property and the mortgage products they may have on offer.

You should remember that mortgage lender criteria changes quite often and this could mean that the product details below may now be out of date.

You should seek independent financial advice.

List of mortgage lenders that allow Airbnb

 Each of these mortgage lenders will have their own requirements which are subject to change at any time and this may seriously affect your mortgage affordability.

You should speak to a mortgage broker who has experience of dealing with Airbnb mortgages for further guidance. 

FAQs about mortgage lenders that allow Airbnb

Do you need a special mortgage for Airbnb?

You may consider the mortgage you need for your Airbnb mortgage as specialist as the mortgage lenders in this space tend to have varying arrangements which mean the product offerings differ significantly.

Do mortgage lenders allow Airbnb?

Not all mortgage lenders allow Airbnb. In fact, most mortgage lenders do not permit you to rent out your residential property at any time and if you do so you may be in breach of your mortgage.
This could mean the mortgage lender switches your mortgage rate to a buy to let mortgage rate which is usually higher than a residential mortgage rate.

Use an Airbnb mortgage calculator

You can use an Airbnb mortgage calculator to see what the mortgage you may be able to afford could be.
You should remember that the outputs of mortgage calculators are only for guidance and do not represent your true mortgage affordability.

Government schemes you may be able to use for an Airbnb mortgage

Although most Government schemes insist that you are only getting a residential mortgage.
In this case, you will likely be getting a residential mortgage with mortgage lenders who allow Airbnb.

This means, in practice, you should be able to get a mortgage with a government scheme and still be able to rent out our house.

  • Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
  • Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
  • Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
  • Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
  • Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
  • Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
  • Right to buy– allows you to buy your home at a discount price.
  • Preserved right to buy– same as above.
  • Right to acquire– similar to the above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

Use a AirBnB mortgage broker for your mortgage in principle

You may want to use an independent mortgage broker to help you get a mortgage on your new home.

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 rather 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 based on your mortgage affordability.

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 as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.

It will also contain information on 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.

This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.

In this brief guide, we discussed Mortgage lenders that allow Airbnb rentals.

If you have any comments or questions please let us know.

If you are in need of advice about your money and you live in the UK then you may 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.