Date Published 25 April 2022
If you're looking to raise some extra cash, then investing in an Airbnb holiday rental property could be just the thing.
While Airbnb will never replace the consistent income and security that comes with long-term lets, it can offer much higher returns.
Can you use any type of mortgage for an Airbnb property?
This is very much horses for courses, and depends on how you intend to let your property. Are you planning to let the entire property, or just a couple of rooms? There are several types of mortgage you could potentially use, and they include…
- Residential mortgages
- Buy-to-let
- Holiday let mortgages
There are no specific mortgages aimed at Airbnb hosts, but there are mortgage brokers who specialise in helping them get the best rates and deals.
The exact type of mortgage you'll need will depend on several factors, and we've broken them down for you below…
Using a residential mortgage
It's quite possible to offer Airbnb accommodation on a residential mortgage, but it is vitally important that you let your mortgage provider know what you are planning.
If it is a room or two you hope to let out to holiday makers, then there are lenders out there who would give their permission.
But be aware that if you want to let out the entire property, then the majority of lenders would see that as a breach of their terms and conditions, which at worst, could see the entire mortgage debt being called in.
The main reason is because a residential mortgage is meant to be used as your home, not an income stream, and residential mortgages usually have lower interest rates to reflect that.
Using a buy to let mortgage
If your plan is to buy a property to let exclusively as an Airbnb, then a buy-to-let mortgage can be a good option.
An Airbnb differs from a normal buy to let, in that the tenants are there for a relatively short term, as opposed to a normal rental which is usually 12 months or more.
So, your mortgage provider may set limits on how long your property is available over a 12-month period. A limit of 90 days over a calendar year is common, while other lenders may allow three months, and a few may allow up to six months.
As you can see, this leaves you with a rental ‘hole' in your year, that you either need to fill with short term tenancy agreements, or make enough from your holiday tenants to carry you through the financial year.
What about changing your residential mortgage to buy-to-let?
This might be a better option if you want to let the entire property as an Airbnb. Whether you can switch to buy to let from residential will be at your lender's discretion, and your chances of success will hinge on whether you meet the eligibility criteria for a buy-to-let mortgage.
The deciding factor here is likely to be the property's rental potential. Your chances of approval will also be higher if you've had your mortgage for more than six months.
For advice on all things property, give our team a call, we'd love to help you.
