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How to get Airbnb Mortgage in the UK

Written by, Marija Petkova

Updated September, 12, 2022

Getting an Airbnb mortgage in the UK can be a great way to make some extra money on the side.

If you’re interested in learning what your options are, the basics of the process of getting a mortgage for an Airbnb, and how to get good rates for it, read on.

How to Get Airbnb Mortgage in the UK

Here are a few simple things you can do to give your application the best chance of success.

  1. Do your research: When it comes to property investment of any kind, it’s always best to do a thorough research of the market to figure out what you can afford and when it will be available. You’ll also need to get the necessary paperwork in advance, including three months of bank statements, proof of address, and income documents.
  1. Check your credit reports: If you want to secure an Airbnb mortgage, it’s crucial to check your credit reports before applying. This way, you will have enough time to dispute any inaccuracies on your credit reports that can improve your credit score, which usually means better chances of obtaining a mortgage, and, sometimes, lower interest rates. 
  1. Speak to a mortgage broker: Consulting a professional when applying for a mortgage is one of the basic Airbnb mortgage rules. For example, if you want your Airbnb rental property and short-term rentals covered by one loan, then speak to a mortgage broker who knows the market, can help you find a lender, and guide you through the entire process.

Types of Mortgage for an Airbnb Property

There are several types of mortgages available for Airbnb hosts looking to make the most out of their property investment.

  • Residential mortgages

It is possible to offer Airbnb accommodations on a residential mortgage, but you must inform your mortgage lender of your plans. 

Most lenders aren’t likely to have a problem if you want to rent a room or two. However, if you’re going to rent out the entire property, some lenders might consider this a violation of the terms and conditions of the mortgage agreement, which could result in the whole mortgage debt being called in. 

  • Buy-to-let mortgages

Buy-to-let mortgages are designed to allow the borrower to let their property to a renter, and you might be able to switch to a buy-to-let mortgage even if you already have a residential loan. A buy-to-let mortgage for Airbnb investment will require more time than just getting regular tenant rent each month because lenders aren’t generally fond of this type of mortgage.

What’s more, most buy-to-let mortgage providers set limits on how long an Airbnb property can be available for rent. 

  • Holiday let mortgages

Holiday letting properties are usually rented out on a short-term basis, which means that many lenders allow them to be used for Airbnb purposes. 

There is an interesting new trend in the UK where some mortgage providers offer holiday-let type mortgages specifically designed with Airbnb hosts who own multiple homes. If you already have two or more houses, this could work well as your third property instead of renting it through traditional methods.

How to Get the Best Airbnb Mortgage Rates

When applying for an Airbnb mortgage, it’s crucial to know what exactly lenders are looking for from borrowers and leverage your 

  • Rental returns

The projected rental returns that mortgage providers expect to see before approving your application are between 125%-145%. If you can generate 140% in monthly income by renting out a property, your application is more likely to be approved.

  • Property type

Many lenders are out there, but they all have different criteria for what makes a property good enough to be sold. For example, some don’t like properties that have historical value because it could increase the risk factor when selling them in later stages, while others will accept anything as long as it’s been legally owned by someone else before you.

  • Affordability

The affordability of your mortgage will depend on your income. Some lenders may base their calculations around Airbnb, but some might require that in addition to other sources like a job or pension – which could help cover any gaps during periods without tenants.

  • Credit history

If you have a poor credit record, it’s important to know the risks involved before applying for an Airbnb mortgage. Some lenders will refuse applications from people with a credit score that’s below the average. So it’s crucial to take care of your credit score.

Bottom Line 

According to a recent study, more than 60 million people have used Airbnb to find a place to stay while on vacation. And that number is only going to continue to grow in the years ahead, making Airbnb a great investment. We hope that this article helped you better understand how the Airbnb mortgage in the UK works.

Frequently Asked Questions And Their Answers

Can I use a second home mortgage to fund an Airbnb?

Second-home mortgages are rarely approved for renting purposes. However, some lenders might accept your application if you can prove sustainable income streams.

Can I use Airbnb income to qualify for a mortgage in the UK?

Yes, you can. Some lenders consider vacation let mortgages to be the best option for Airbnb-style lettings because they’re often rented out for a short period. 

Is my Airbnb mortgage interest tax deductible?

You can deduct mortgage interest from your taxes if you have an Airbnb mortgage in the UK.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.