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  • Mortgages & Finance

    What mortgage do you need for an Airbnb?

    It’s easy to see why Airbnb has exploded in popularity. It’s great for travellers because it’s flexible, cheap and – more often than not – you end staying somewhere that’s still pretty nice, despite the fact it costs less than a hotel.

    With such a demand for cheap, short-term stay, setting up an Airbnb can also be extremely lucrative. But, how exactly do you set up an Airbnb? And what kind of mortgage would you need?

    Setting Up Your Airbnb

    Registering a property on Airbnb is rather straightforward: you simply sign up to their website and list your property for free. This side of things is easy. It’s a little more complicated if you have a mortgage on the property you want to let out.

    Sure, you can still register, but you’ll likely be in violation of your mortgage contract.

    Penalties for Violating Your Mortgage Contract

    Letting out your property as an Airbnb without explicit permission from your lender can have serious consequences. Your lender could demand that you immediately repay your mortgage in full – but this would be extreme. It is likely, however, that your lender would raise your rate or demand a fee.

    You could also face issues with your insurance provider. If you let out your property – and the nature of the lettings isn’t covered by your policy, you may put your home at risk. Always check with your home insurance provider before letting out your property. You may need to find a more suitable policy.

    Why Don’t Lenders Like Airbnb?

    A lot of lenders stay away from short-term lets, like Airbnb, because the guest turnover is much higher – consequently so is the risk. You’re likely to have a greater variation in guests, some who’ll take better care of the property than others.

    How Do You Let Out a Property You Already Own?

    If you already have a mortgage on a property but want to let it out, you’ll have to check with your lender. You could apply for a “consent to let”. This is where your lender allows you to let out your property but also remain on your existing mortgage. Even if they do grant you permission, you may face higher interest rates or additional fees.

    A lot of lenders won’t allow letting at all, never mind the short-term lets synonymous with Airbnb. If you’re not granted permission, but you’re set on letting out your property in this way, then you may have to remortgage. Bear in mind that you may face an early repayment charge if you remortgage early.

    If you own a property outright, with no mortgage remaining on it, then you can let it out how you choose. However, you’ll have to check your home insurance policy to make sure you’re covered. You may need to contact your insurance provider.

    If you own a leasehold, then it’s likely letting out your property may violate the terms of your lease. Check with your freeholder before signing up to Airbnb.

    Mortgages for New Airbnb Properties

    Unless you have the savings to buy a second residence outright, you’ll probably need a mortgage.

    If you want to purchase a new property and:

    • Let out the whole property on a permanent basis on short-term lets

    It’ll be hard to find a lender who offers a mortgage specifically for this purpose. However, some lenders have products for holiday lets or a short-term letting range.

    • Part-let the residence on short-term lets

    You may find a lender who will offer a residential mortgage at a normal rate, but these are quite rare. Expected rental income would also be ignored in the affordability assessment.

    • Let out the whole residence for a limited period on short-term lets

    Some lenders will offer you a residential mortgage at a normal rate, but they will also likely stipulate a maximum period – usually around 3 months – that you could let out the property. Again, rental income would be ignored in the affordability assessment.

    • Let out more than one room on short-term lets

    You’ll likely find yourself outside of the criteria for a residential mortgage lender and would instead have to pursue another kind of mortgage, possibly commercial – like one you’d have for a standard B&B property.

    How Do I Find These Mortgages?

    You can do some independent research and approach lenders yourself, or you can use a mortgage broker.

    We can help you arrange all of this. Call the PT Broker Hotline on 0333 363 6507 or email us at ptbrokers@johncharcol.co.uk


    Call the PT Broker Hotline on 0333 363 6507 or email us at ptbrokers@johncharcol.co.uk

    I really hope this information is disseminated widely! As a short term let owner I feel very protective over the sector and as with everything it appears the few will spoil it for the many . I have had no end of conversations with people treating short term let’s as a side project without all the due care and attention or the necessary legals in place !

    I for one would welcome some form of control over the sector (obviously nothing too disruptive) to ensure that property’s have all of the correct lease terms/mortgages/insurance etc in place


    I and many others I am sure would like to know if you have had success in obtaining consent from mortgage lenders and freeholders of leasehold properties.


    Hi Don ,

    I have two leasehold city centre apartments that Are used for services accommodation . On both occasions It has been quite a lengthy process to firstly find a property suitable and then to negotiate lease terms to include specific wording that allows for short term lettings. In my experience 99% of lease terms have wording along the lines of “ not to be used for business purposes” or “ to be let only on a minimum 6 month AST” . Both apartments belong to a very small block and on both occasions I have bought from a freeholder who to enable sale was happy to change wording. Given the very specific/fortunate nature of my purchases and the lengthy searches I have completed on each occasion I find it hard to believe that the hundreds of properties listed in my city have all the correct terms in place .

    as a slight aside , to show how things can go wrong . A friend of a friend began to use a property for short term lettings -firstly lieing on the mortgage app that it would be used as a btl and also purchasing in a block of apartments who’s legals didn’t allow. His business lasted all of 2 weeks before neighbours caught wind! A warning to all I feel!

    With regards mortgages I have used specific holiday let mortgages on each occasion . It seems to be a growing market as the model gains more and more popularity .