Airbnb has become a popular way for people to let out a room or property for a flexible income stream, along with other websites that let you list and advertise your property for a short term. If you're thinking of renting a property out through Airbnb, it's important to make sure you have the right mortgage type. You’ll need to take out a mortgage that suits what you intend to do with the property you’re purchasing – e.g. a holiday let mortgage would allow you to let out your property on a short-term basis. There are also options if you want to change the purpose of a property you already have a mortgage on.

When buying a property to rent through Airbnb, consider the tax implications of holiday rentals, especially with changes happening to rules around second homes and rental properties.

In this guide, we’ll look at how you can get a mortgage for an Airbnb property. We’ll also explain any complications that can arise based on the type of property, as well as things you should know before buying a holiday let. For complex mortgage types, it's always recommended to use an experienced mortgage broker who can help you get the right type of mortgage.

 

Can You Get a Mortgage on an Airbnb?

It is possible to get a mortgage for an Airbnb property, but not all lenders will offer mortgages on this type of let. There are other elements that can make it more complicated to get a mortgage, such as what type of house or flat you want to buy, or concerns over affordability.

If you want to buy a property to start offering rentals through Airbnb or a similar website, your options include holiday-let type mortgages. However, there’s also a growing acceptance of short-term letting amongst buy-to-let lenders and residential lenders. These obviously come with a few caveats which we’ll explain in this guide.

Mortgage options for an Airbnb include:

  • Holiday let – a product that allows people to own a second home that they want to let out on a short-term basis
  • Buy-to-let mortgage products that allow short-term lets outside of AST (assured tenancy agreement)
  • Normal residential mortgage – this would only be an option if you plan to continue living in the property and want to let out a room on a short-term basis, or you plan to continue living in the property the majority of the year and only let it out for short periods of up to a total of 90 days per year
  • Residential mortgage with consent to let – this would only typically be an option if you already have a residential mortgage on a property but you later want to let out the property for more than 90 days per year and will no longer be living in it yourself

We go into more details about this mortgages below.

Holiday Let

A holiday let mortgage is for people who essentially want to have a second that they can use themselves and let out on a short term basis to generate extra income. Holiday let products are typically on an interest-only basis.

It’s best to use a broker like John Charcol if you want a holiday let mortgage product because each lender assesses applications for holiday lets differently. None of them have the same criteria, which means it’ll be difficult to find a suitable lender for your circumstances without any expert help. Our advisers will learn about your requirements and your intentions for the property and use this information to pair you with a lender whose criteria best lines up with your situation.

Residential Mortgage with Consent to Let

A residential mortgage with consent to let will only be suitable for you if you have a residential mortgage on a property you no longer intend to live or stay in and instead want to let out to a tenant for more than 90 days.

It’s unlikely a lender will grant you consent to let every year, so if you intend on letting out your property in this way for the foreseeable future then you’ll need to remortgage onto a new product.

To apply for consent to let you must contact your lender.

Buy-to-Let Mortgage for Airbnb

Buy-to-let mortgages are designed for rental properties and are usually interest-only mortgages.

Typically buy-to-let mortgages are for properties that you intend to rent to the same occupant for a significant amount of time — usually a minimum of 6 - 12 months. These operate on an AST (assured tenancy agreement basis), which means the property is rented to a tenant for a fixed term (6 - 12 months) or on a period/rolling (often monthly) basis. Consequently, this means that most buy-to-let mortgages are not suitable for Airbnb properties which are often let out to different tenants for much shorter periods of time.

There’s a small handful buy-to-let mortgage lenders that do lend on short-term lets however. These lenders allow short term lets outside of ASTs (assured tenancy agreements). Because not many lenders offer these types of buy-to-let products, you’ll often find that you’ll need to use a mortgage broker to source a suitable product. Furthermore you’ll likely find your options limited.

Normal Residential Mortgage

If you already have a residential mortgage on your home, but you recently decided that you want to let out a room in your home on Airbnb to generate some extra cash or you want to live in the property the majority of the time and only let it out for up to 90 days per year, then you may find that you won’t have to change your mortgage product at all.

As you’re only renting out the property on a short-term basis – e.g. for under 7 days – then there will be no need to change the terms of your mortgage.

It’s still recommended that you contact your lender to ask them about their conditions regarding short term letting of your residential property.

If you’re unsure then speak to one of our advisers on 0330 433 2927 and they can explain your options.

Do I Need a Commercial Mortgage for Airbnb?

You wouldn’t ever need a commercial mortgage for an Airbnb property. Airbnb mortgage products typically come under the buy-to-let umbrella, rather than the commercial one. This is because they’re still technically residential as you’re renting to a tenant – not a business. Finding an Airbnb non-commercial mortgage is generally simple.

Are Airbnbs Really a Good Investment?

The idea of investing in an Airbnb property has become increasingly popular, particularly with the rise of remote working and the growing appetite for unique travel experiences. On the surface, short-term lets can appear to be a lucrative way to generate income, especially in popular tourist destinations. However, the reality is a bit more nuanced.

While it is true that some investors see strong returns, success often depends on a number of factors. Location is key, as is understanding local regulations which can sometimes limit or restrict short-term rentals. There is also the need to factor in ongoing costs such as maintenance, cleaning, insurance, and the time commitment required to manage bookings and guests.

Another point to consider is seasonality. Unlike traditional rentals, income from an Airbnb can fluctuate depending on the time of year and travel trends. It can be profitable, but it is not always consistent.

Why Don't All Mortgage Lenders Offer Mortgages for Airbnb Properties?

Holiday lets, or short-term lets in general, can be harder to get a mortgage for compared to either residential or standard buy-to-let mortgages. This is because Airbnb is a relatively new way of renting out holiday properties and some lenders are still concerned about the risks involved and how to accurately assess the expected rental income.

Can I Turn My Residential Property into Airbnb?

You may be able to turn a residential property into an Airbnb if:

  • You’re only renting out a room on a short term basis and therefore do not need to declare this to your lender
  • You’re living in the property for the majority of the year and only rent it out for up to 90 days per year
  • You get consent to let from the lender and let out the whole property for more than 90 days

How Do Mortgage Lenders Know if You're Doing Airbnb?

Always tell your mortgage lender if you start offering rentals through Airbnb or any other rental avenue. There are various ways your mortgage provider can find out that you are on Airbnb and, if you have not told them, you can be faced with repercussions for breach of contract.

Can I Use My Buy-to-Let Property for Airbnb?

Unless you’re with a buy-to-let lender that allows short term lettings already, then you’ll have to remortgage onto a suitable product if you wish to rent out your property on a short term basis.

How Is Affordability Calculated for an Airbnb Mortgage?

Affordability is calculated in different ways by different mortgage lenders.

Holiday let lenders will either assess your affordability using the expected market rental income as with a normal buy-to-let mortgage or they will look at averages of the high, medium and low rental seasons.

Buy-to-let lenders that allow you to let out the property on a short term basis will assess your affordability based on the expected market rental income as with a standard buy-to-let mortgage.

The lender won’t need to reassess your affordability if you’re on a residential mortgage with consent to let. However, if you later remortgage onto a new product then the new lender will assess your affordability.

What Do I Need for an Airbnb Mortgage?

As for any other mortgage type, you’ll need general personal information - including proof that you meet a lender's eligibility criteria. This can easily be checked with individual lenders.

Consider also the required deposit amount and appropriate insurance.

Deposit for Airbnb Mortgages

The minimum deposit for buy-to-let and holiday let properties is often around 25%, though every mortgage lender offers different amounts. This is for standard buy-to-let or holiday let properties, but if there are additional considerations for your chosen Airbnb property, then the minimum deposit required could increase. Additional factors include construction type, location, size and more.

Insurance for Airbnb Mortgages

Getting suitable insurance is vital for a mortgage application as it’s a requirement for mortgage lenders.

Getting insurance and a mortgage for an Airbnb rental property is typically simple, but it will often cost more than a typical buy-to-let insurance policy. This is because of the increased risk of damage to the property from having different people rent it out frequently. You should make sure that you can get appropriate insurance for your Airbnb property before you consider applying for a mortgage.

What Is the Airbnb 90-Day Rule?

In Greater London, hosts are restricted from renting out their entire property on a short-term basis for more than 90 nights within a calendar year without obtaining planning permission from the local council. This regulation was introduced to help preserve long-term housing availability and maintain community stability.

Once a listing reaches the 90-night limit, Airbnb automatically blocks further short-term bookings for that property until the end of the year.

It is important to note that this rule applies specifically to entire home listings. Renting out individual rooms within your primary residence is not subject to the 90-day cap.

If a host wishes to exceed the 90-night limit, they must apply for a change of use through their local council. However, obtaining such permission can be challenging, as many councils are reluctant to grant it due to concerns over housing shortages.

Non-compliance with the 90-Day Rule can result in significant penalties, including fines of up to £20,000.

What Are Airbnbs Fees?

Airbnb charges fees to both hosts and guests, and it is important to understand how these work when listing or booking a property.

For hosts, Airbnb typically takes a service fee of three per cent from each booking. This amount is deducted automatically and covers the cost of processing payments and providing customer support. In some cases, particularly for hosts who use Airbnb’s professional hosting tools or manage many listings, a higher fee structure may apply where hosts absorb the entire fee on behalf of the guest.

Guests are usually charged a separate service fee, which can range from around five to fifteen per cent of the booking subtotal. This fee varies depending on the length of stay, the total cost, and other factors such as location and demand. It is clearly shown during the booking process, so guests know exactly what they are paying for.

In addition, cleaning fees and local taxes may also apply, depending on the host and the property location. These are set by the host and can affect the total cost of a stay.

Understanding Airbnb’s fees helps ensure there are no surprises when managing a booking or calculating returns on a rental property.

Can a First Time Buyer Get an Airbnb Mortgage?

Yes, a first time buyer can potentially obtain a mortgage for a property with the intention of using it for Airbnb or other short-term rentals, but they’ll often find their mortgage options even more limited.

However, there are several factors to consider:

  1. Lender criteria - not all mortgage lenders offer products suitable for properties intended for short-term rentals. Some lenders may have specific requirements or restrictions regarding the use of the property, including limitations on short-term rental income as a source of mortgage repayment
  2. Deposit requirements – first time buyers may face higher deposit requirements when purchasing a property for short-term rentals, as lenders may perceive these properties as higher risk. A larger deposit can help improve the borrower's chances of securing financing and obtaining more favourable mortgage terms.
  3. Mortgage type - the type of mortgage available to first-time buyers interested in purchasing a property for Airbnb purposes may vary depending on the lender. Some lenders offer specialised buy-to-let mortgages or holiday let mortgages tailored to investors or homeowners intending to rent out the property on a short-term basis
  4. Income requirements - lenders typically assess the borrower's income and affordability when determining mortgage eligibility. Income generated from short-term rentals, such as Airbnb, may be considered as part of the borrower's overall income, but lenders may apply stricter criteria or discounts to account for the variable nature of rental income
  5. Credit history - a positive credit history is essential for first-time buyers seeking a mortgage for a short-term rental property. Lenders will evaluate the borrower's creditworthiness based on factors such as credit score, payment history, and debt-to-income ratio
  6. Legal and regulatory considerations – first time buyers should be aware of any legal or regulatory requirements related to short-term rentals in their area, including zoning laws, licensing requirements, and homeowners' association (HOA) rules. Non-compliance with these regulations could affect the borrower's ability to operate the property as an Airbnb rental
  7. Insurance coverage - it's important to obtain appropriate insurance coverage for a property used for short-term rentals. Standard homeowners insurance may not provide adequate coverage for rental activity, so first-time buyers should consider purchasing specialized short-term rental insurance or landlord insurance

Before pursuing a mortgage for an Airbnb property as a first-time buyer speak to a member of our team to find out what products are available to you. We will research lenders, provide you with the mortgage options available, we specialise in this type of financing.

Other Options to Purchase a Property for Airbnb

If you’re unable to get a mortgage for a holiday let Airbnb, you may be able to remortgage your home to release funds to buy the holiday let outright

Remortgaging for Airbnb

If you have a primary residence or another property without a mortgage, you could remortgage it in order to secure the funds. However, this means that the property you own would be the security for the mortgage, so if you default on mortgage payments, your home could be repossessed.

How Can a Specialist Mortgage Broker Help with an Airbnb Mortgage?

An independent mortgage broker like John Charcol can help you get the right kind of mortgage for a property you intend to let out through Airbnb.

Our advisers will make sure that you get the most suitable deal on your mortgage even if it’s a complex situation. Some lenders do not deal directly with the public, so you’ll need to go through a broker to have access to the best mortgage options.

Here at John Charcol, we have mortgage brokers with experience in Airbnb and holiday lets. Get in touch today to see how we can help you get the right type of mortgage for your needs.

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