Can you Airbnb on a Residential Mortgage?

Can you Airbnb on a Residential Mortgage?

If you are considering purchasing a property to rent out as an Airbnb, or are planning to let your home on Airbnb, you might have several questions about your mortgage options and the compatibility with short-term lets.

Some of the questions we often hear are:

• What mortgage do you need for Airbnb?
• Do you need a buy to let mortgage for Airbnb?
• Can you Airbnb on a residential mortgage?

But don’t worry. GPS Financial has been offering expert mortgage advice for over a decade and has the expertise to advise on any type of mortgage, including those for Airbnb.

Here’s some helpful information to help you understand what mortgage you’ll need for an Airbnb. But first, let’s explore short-term lets and understand how holiday rentals differ from standard residential properties.

Understanding short-term lets

Short-term lets are regarded as anything under 6 months. Anything between 6-12 months is considered a mid-term let, while anything over 12 months is a long-term let.

There are specific rules around Airbnb and short-term lets in some cities. For example, in London, a short-term let must be under 90 days to conform.

Short term lets mainly include:

• Holiday rentals
• Serviced apartments or houses
• Temporary short-term housing

Holiday rentals are by far the most common form of accommodation on Airbnb, although you’ll also find serviced apartments for businesses on there too.

Holiday rentals have always been a lucrative form of investment, but the arrival of Airbnb turned the entire industry on its head.

Not only did it provide the opportunity for anyone to make money from short-term lets, but it also increased prices across the board. If you’re looking for an investment opportunity, Airbnb could be just what you’re looking for.

The platform is easy to use and enables almost anyone, anywhere to rent out a property for short-term rentals.

But remember, Airbnb varies from the traditional residential use of a property, and therefore acquiring a property for this short-term use will change the way you can finance it. 

What mortgage do you need for an Airbnb?

If you’re considering investing in this market, you might be wondering… Can you Airbnb on a residential mortgage? Do you need a buy to let mortgage for Airbnb? Let’s get into it.

Do you need a buy to let mortgage for Airbnb?

You don’t always need a buy-to-let mortgage for an Airbnb.

If you live in the property and want to let out part of it through Airbnb, you may be able to Airbnb on a residential mortgage. That means you may not need a new mortgage, but you will need to check with your mortgage provider to avoid breaching the terms of your existing mortgage.

If they agree, you can rent out part of your property without a new mortgage. However, not every lender will permit you to change the use of your home like this.

If you want to buy a property to let out purely as an Airbnb, you will need a holiday let mortgage.

Some lenders will help you switch from a residential mortgage to a holiday let mortgage, but most will require a new mortgage application.

Holiday Let Mortgage and Buy To Let Mortgages

You have two main mortgage options if you’re considering Airbnb: holiday let mortgages and buy to let mortgages.

A holiday let mortgage is a specialist product that allows you to rent out your property on Airbnb and other platforms.

Some lenders allow you to also use the property yourself for up to 90 days per year.

To qualify for a holiday let mortgage, a lender will look at your own income and the income potential of the property. That includes local market conditions and rental potential.

Due to the higher risk associated with short-term lets, there is often a higher deposit requirement to qualify for this type of mortgage.

A buy to let mortgage is designed for medium to long-term lets covered by an Assured Shorthold Tenancy (AST).

The rental calculation for the mortgage will be made on rental income over the longer term and not your personal income.

The location and local market conditions are less of an issue when applying for a buy to let mortgage but you cannot live in the property yourself at any time with this type of mortgage.