7 Steps to Getting an Airbnb Mortgage

room, bed, view of garden.

Airbnb. Most of us have used it at some point. But how did it start?

Ever since 2007, when two friends, Brian Chesky and Joe Gebbia, put an air mattress on the floor of their living room and rented it out to guests as a homestay, this online company has been growing.

And many people nowadays are hoping to get in on the action. Running a little bed and breakfast business is an attractive way to meet new people and pay the mortgage.

But what does it mean in terms of getting a mortgage?

room, bed, view of garden.

One: Check your current mortgage

If you’re looking to buy a property and run it as an Airbnb… firstly, check what type of mortgage you need.

For example, if you’ve got a residential mortgage on a home and you’re dreaming of moving out and turning it into a cozy little Airbnb, you might have to change a few things.

Make sure you’re covered. Look out for the rules and regulations on having paying guests.

Ask your mortgage lender.

It’s best to sort all this out before you pop your property up on the website for rental.

For example, you might find you need to apply for what’s known as ‘consent to let’.

On the other hand, if you want to turn a buy-to-let property into a holiday rental, you’ll need an appropriate mortgage for that.

That means you might have to change your mortgage lender and the type of agreement you have.

Don’t get caught making an avoidable mistake. Buy-to-let mortgages don’t cover you for short-term homestays.

That’s because a buy-to-let mortgage only covers long-term lets.

As soon as you start doing Airbnb, you’re renting out on a short-term basis.

And that makes a huge difference when it comes to how your mortgage works.

Two: Check the potential rental income.

A lender will want you to be able to cover your monthly payments.

To do that, they need to know what the potential income on your property might be.

In fact, this is more important than your main income. Although they’ll take that into account too.

But, having said that, the rental income forecast is what drives a lender’s decision to lend you money.

Talk to local letting agents. They can give you information about this. If you don’t already live in the area you’re thinking of setting up your Airbnb in, make sure you visit it and see if there’s enough to attract a decent volume of visitors.

You can always begin your search by talking to a mortgage advisor. Make sure they’re an expert in holiday let mortgages.

If you call us, we can put you in touch with agents and letting management companies who can help with this part of your search.

Three: Check how much you can borrow.

If you’re buying a property with a view to running it into an Airbnb, look into how much you’ll need as a deposit.

Most lenders want a bigger deposit for a holiday let style of property, than you would for a residential mortgage.

That’s because there’s built-in risk associated with any business venture.  

Usually, you’ll need to find at least 20% to put down.

Many lenders will lend up to around £750K.

But it’s possible to borrow several million.

It all depends on lots of factors, including how capable you are of paying the mortgage – even if your rental income drops.

Four: Check your mortgage payment options

The payment options on a mortgage for an Airbnb are like those you can get on a residential mortgage.

Having said that, they might be a slightly higher rate.

That’s because, well, there’s a slightly higher risk.

Risk in this case is assessed by the fact that there will always be fluctuations in the short-term rental market.

So, it’s best to keep this in mind when you’re figuring out whether to jump into becoming an Airbnb host or not.

Generally, you’ll be looking at payments on fixed or variable rate mortgages.


Five: check the location and suitability of your potential Airbnb property

Location matters.

A lot.

I mean think about it. What are you offering?

Make some notes. Why would anyone want to come and stay in the property? There are plenty of reasons why people visit a place in the UK.

It might be:

·       A busy city with plenty of attractions.

·       A seaside town with traditional beaches and ice cream.

·       A romantic riverside retreat.

·       A market town offering lots of local activities and places of historical interest.

·       A rustic village near a castle, spa, or stately home offering a chance to relax.

·       A rural retreat with great walks and a national park to explore nearby.

Write down all the reasons why someone would want to book a room with you.

Lenders take this into account when considering a mortgage for an Airbnb.

Bear in that that to make sure you’ll be able to comfortably pay back the mortgage by letting it out regularly to guests, they’ve got certain criteria.

Do your homework.

For example, check how many days or weeks in the year you’ll be expected to be letting it out.

Often, you’ll need to make it available for letting for around 210 days a year. Of those, you might need to have paying guests for 105 or so days within that time frame.

As for the location, it’s wise to pick that’s not only attractive, but also somewhere people can get to easily.

If your property is cut off when the tide is high, you might have trouble finding a lender.

And it the property itself is a tiny shed in a field, it might not be big enough to be considered as a viable short-term let either. Even if it’s in the middle of an area of outstanding beauty.


Six: Find a holiday let mortgage broker…

If you’ve done all the research yourself, that’s great.

And if you’re still serious about going ahead, it’s time to speak to an expert.

Shop around and find a mortgage advisor who specialises in holiday let mortgages.

They’re best placed to help you by answering any remaining questions you have and begin the process itself.

Make sure you choose someone you can trust.

They should have a focus on relationship-building (they’re going to fight your corner if push comes to shove), be flexible about appointments, and have a lot of experience with type of niche mortgage product.

They’ll help you get all your paperwork and documents in order.


Seven: Lastly – enjoy your new business!

Once your mortgage offer comes through and the property is yours, don’t forget to enjoy it.

Getting a mortgage to start an Airbnb business is a great achievement.

Becoming an Airbnb host is – if you’ve never done anything like this before – is a whole new way of life.

So remember to take time to savour being your own boss.


Let us know where you are on your journey to becoming an Airbnb host. Drop us a line, and we’ll get back to you.

And if you’re already considering a holiday let mortgage, here’s a link to our free eBook ‘Your Holiday Let Mortgage Guide’.