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Buy to Let Airbnb Mortgage – what are the options?
Airbnb has made it so easy to let out your home for holidays and short breaks, it can be a good way to generate some extra income.
It’s now possible to get an Airbnb Mortgage – that is, to buy a home specifically to put on Airbnb as a short term rental.
Can you get a mortgage for an Airbnb property?
These days you can find a mortgage lender for almost any situation as long as you meet the criteria. You can certainly get a mortgage to buy an Airbnb property, but you’ll need to be clear about how the letting process will work.
A few key questions to prepare for include:
- Are you planning to let a whole property, or a building on the same plot as your home, or a spare room(s) in your home?
- Is this Airbnb a brand new property, or a home you already have a mortgage for?
- How many weeks per year will your Airbnb be available?
Do I need a Buy to Let mortgage for an Airbnb?
If you already own a home and are buying a separate property to put on Airbnb, a Buy to Let mortgage is probably the most suitable type of mortgage.
A lot of lenders will allow you to let your property for short breaks on a Buy to Let mortgages – but there are often restrictions on how many days per year the property is available. In some cases this is up to 90 days, while others allow up to 16 weeks or six months.
However, if you want to rent the property out for more than six months a year, you could look at a Holiday Let mortgage. This is a similar kind of mortgage product to Buy to Let, with your mortgage offer based on the potential rental income. Fewer lenders sell these mortgages – they believe it’s riskier to have lots of short term tenants than one or two permanent ones.
Can I be an Airbnb host based on my current property and mortgage?
If you’re looking to rent out a spare room or rooms in your home via Airbnb, it could be as simple as talking to your current lender. You’ll often be able to do this under your current mortgage agreement.
But renting out your entire property on Airbnb could be a breach of your mortgage contract. You might need to change your mortgage to a Buy to Let or Holiday Let in this case. A Mortgage Broker can help you explore the options.
Finding good mortgage rates for your Airbnb
Finding good mortgage rates is usually down to two main factors: the size of your deposit and your credit rating.
Most Buy to Let mortgages require a significant deposit – around 25 per cent is normal, although you may be able to buy with less. Rates are often higher than with residential mortgages, too.
The more you can put down against the property, the more appealing you will be as a customer, and lenders will therefore offer you better rates.
Mortgage companies will also look at your credit score as part of your application. If you have had any credit issues in the past, you’ll get less competitive mortgage rates. Serious credit problems could make it very difficult to get a mortgage.
As with any financial product, make sure that the repayments on your mortgage are affordable. With any luck your Airbnb will be busy with guests who will pay the mortgage for you – but be aware that in quiet periods the mortgage payments will be down to you.
Is Airbnb mortgage interest tax deductible?
There are various tax considerations involved in renting out a property. You will need to file a tax return each year stating your income and tax payable. In general, there are various costs that you can deduct before tax, including cleaning costs, repairs, insurance and your payments to Airbnb.
For detailed advice, speak to an accountant. There is also useful information for potential hosts on the Airbnb website.
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How can Bespoke Mortgages & Finance Centre help?
As professional Mortgage Brokers we have lots of experience in helping people buy and manage rental properties of all kinds.
We will explore all the potential mortgage options for you and recommend the best options to suit your specific financial situation. Contact us today and we will help you make your Airbnb plans a reality.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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