Airbnb Mortgage Application Tips

Preparing an application for an Airbnb property - what should you look for in a provider?

Airbnb Mortgage Application Tips

The Airbnb Rental market was worth over £3.5bn to the UK economy in 2018* and so it’s unsurprising that more and more people are keen to grab their piece of this lucrative market.  At Furness for Intermediaries, we’ve noticed a steady increase in the number of enquiries from intermediaries representing a client whose end goal is to let their property using this service – and why not?  The great exposure it offers for a relatively low cost is very attractive and the flexibility to only show dates which suit you, (rather than having to commit to providing a certain number of weeks per year as you do with a traditional holiday rental company) allows the owner to use the property themselves whenever they choose to do so.  The key of course is finding a mortgage provider who can support this approach and help your client to afford their dream holiday property.

*source: Airbnb UK Insights Report

Although specific terms and conditions on a mortgage which reference Airbnb are rare, some lenders are still nervous about a business plan which includes mention of a dotcom business like this – even though the company is soon to celebrate its 10th birthday.  There are options out there though, often with solution based lenders who will underwrite each case individually and take a balanced view of every situation. 

Cost is always important but “other” features of the mortgage are especially relevant for the holiday let market. Their presence (or absence) is critical in either realising the dream of owning a country bolthole or seaside getaway – or just buying a property which provides a small return for the future but only gives a load of hassle and no visible benefit in the short term.  The following pointers may help you find your way to a provider who can offer a great solution for your client – cementing your relationship with them for many years to come.

6 Tips for Airbnb Applications

 1

Establish early in the conversation with your BDM the amount of time that the property owner can use the holiday home themselves.  One of the most attractive features of Airbnb’s service is the fact that owners can let their properties for flexible periods of days or weeks at a time. In practice this means that they could let their property out for some of the summer but keep some weeks back to use the property themselves while the better weather’s still around.  Finding a mortgage with an extended period available for own use can be a real deal clincher

 2

Advise your client to line up a rental estimate from a specialised holiday let agent as early as possible in the process.  This doesn’t need to be through Airbnb necessarily but lenders will need to see their estimates of low, mid and high pay rental before an offer can be made.  Getting these estimates can sometimes be trickier than expected (if the property is in an area which is unfamiliar to the agent for example) – you don’t want a 3rd party to slow things down.

 3

Speak to the lender even if your client is disappointed with the rental projection supplied.  There are products available which only require the average of the rental taken and the rent to be 125% of the product payrate. 

 4

If your client’s real goal is to use the property themselves for “free” - ask the mortgage provider for an interest only solution – these are available for the Airbnb market too.

 5

Although you can’t advise your clients on the specific place to buy, properties on a holiday let complex are much trickier to find a mortgage for and this is worth bearing in mind when they begin their search.  This is often the case for properties with an occupancy restriction (i.e. those which can only be used for holiday let purposes)

 6

Don’t let clients be put off by what looks on paper to be a relatively modest income.  Mortgages for an Airbnb let can be secured on a joint income of just £30K which of course fits nicely with those lucky enough to have taken early retirement who also have plenty of time to enjoy a country retreat.

In summary, your client may be looking at the Lake District or Cornwall – or may live out in the sticks and dream of a weekend pad in the city centre.  Airbnb offers a simple, accessible route to market which can be managed from their front room.  Mortgage solutions exist which fit very nicely with the requirements of this growing sector – advise your client on products which offer the flexibility to enjoy their property as well as a financial return and you’ll be their first phone call when they’re looking to buy property number 2.  Get ready for the endless holiday snaps though…

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