A Mortgage for your Airbnb

Friday August 10, 2018

Airbnb is always in the headlines these days. Despite causing some controversy it continues to enjoy consistent growth. Many homeowners are looking to get in on the potential rewards. However, first they need to ensure that the mortgage they have is suitable for a possible Airbnb let.

Accommodation site Airbnb has seen bookings in London rise by 130% in the last year, according to new data. An astonishing 4.62m nights of accommodation have been booked on the home-sharing site. But some owners hoping to cash in on this trend may be breaching their mortgage contracts by doing so. People hoping to make some extra cash from their only homes are likely to have a residential mortgage – and many high-street lenders don’t allow such properties to be used for short-term letting.

Renting out your home via Airbnb

For example renting out your whole home via Owners on Airbnb or similar house-sharing platforms  may seem like a simple way to increase income. Whilst you spend those nights with a friend or family member. However  mortgage lenders often see this as a breach of their mortgage terms. You are making money from your property, not using it as your residence.

When asked in a recent survey High Street banks responded as follows –

Royal Bank of Scotland said offering your whole property would likely be a breach of the mortgage terms. Nationwide does not allow a property to be let on Airbnb if it is the owner’s only residence. Santander said owners planning to rent out their whole apartment would need to apply for consent to let, which would involve paying a fee. Lloyds and Nationwide both said anyone seeking to let out the property would need to gain consent first, with each request decided on a case-by-case basis. However, Metrobank will allow up you to let via Airbnb for up to 90 days a year. If you breach your mortgage contract, you could face a range of penalties – from needing to pay higher interest rates to, in the worst case scenario, having the loan called in.

Buying a property for Airbnb listing

For in-demand tourist destinations, Airbnb can seem like an attractive alternative to a buy-to-let property. Depending on the location, you could equal or outstrip the rent you would receive from a normal tenancy agreement by letting the property on a week-by-week basis. But few high-street lenders are open to approving a mortgage for an Airbnb let.

By far the best option if you are considering either idea is to speak to a broker who is familiar with different lenders attitudes and their products. Here at The Finance Roome we commonly source mortgages for Airbnb landlords as well as the more usual  Buy To Let options. Click here for help or call us on 01242 226353. 

You might discover that Airbnb can work for you after all!