Airbnb continues to thrive, offering travellers unique and affordable accommodation options. Over the past decade, Airbnb has gained immense popularity and offers attractive opportunities for property investors seeking to diversify their income.
In fact, purchasing property for Airbnb rentals is often considered one of the most effective ways to invest in property. Many hosts have been able to generate enough income from Airbnb to leave their day jobs. So, if you’re thinking about investing in Airbnb, it could be a smart move.
That said, acquiring and preparing a property for Airbnb guests requires significant financial investment. The challenge is that most people looking to enter this market don’t have the cash to purchase a rental property outright. This raises the question many prospective Airbnb investors ask: “Can you mortgage an Airbnb?”
The short answer is yes, but it’s not as straightforward as some might think. Because Airbnb properties are short-term rentals, securing financing often involves more scrutiny from lenders compared to standard investment loans for traditional rental properties. We at Miles Rhodes Mortgages have recently placed a number of mortgages for Airbnb properties.
The eligibility criteria for an Airbnb mortgage can vary depending on the type of mortgage you choose. Here are some key factors that might affect your options:
Renting Out Rooms or the Entire Property: This can influence the kind of mortgage you need. Even if Airbnb rentals are allowed, some lenders may impose restrictions, like a limit on the number of rooms or days you can rent out.
Property Type: If your property has unique features or is classed as ‘non-standard construction,’ some mortgage lenders might be reluctant to take on the added risk of it being rented out on Airbnb. In such cases, you may need to approach a specialist lender to secure a mortgage.
Deposit: For a buy-to-let (BTL) mortgage on an Airbnb property, you’ll generally need a larger deposit than for a residential mortgage. Most BTL Airbnb mortgages require a minimum deposit of 25%, although your broker might be able to find slightly lower options depending on your situation.
Rental Coverage: If you’re taking out a buy-to-let mortgage, you’ll need to demonstrate that the rental income from Airbnb will cover your mortgage payments, typically around 125% to 140% of the monthly mortgage cost.
