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How to finance an Airbnb purchase

For a long time, no lender would touch this. Thankfully times have changed, as Jeni Browne explains…

It’s the summer holidays and therefore the time we see an upsurge in holiday let enquiries – particularly from those wanting to list their property on Airbnb.

Financing a holiday let has always been slightly trickier than financing a standard rental property, owing to the peaks and troughs of income and the high maintenance costs which come with running this type of business. Financing an Airbnb – even harder! For a long time, no lender would even consider touching this type of enquiry.

Axis Bank was the first to offer a solution, but only to select areas of the UK. The other issue is that applicants must already own at least three buy to let properties. Clearly, this solution is not for everyone…

As you would imagine, I was nothing short of delighted when we were alerted of a new offering to the market (from an established lender) willing to cater to the Airbnb market!

Why is this such a breakthrough? Well...

  • There are options for both personal and Ltd Co applicants
  • The property can be let on a holiday let or Airbnb basis
  • Applicants must have at least one buy to let in the background
  • No minimum income requirements
  • Lending to 75% LTV
  • This lender takes a pragmatic view on minor credit blips

Oh, and did I mention that rates start from 2.99% (5.1% APR)!!*

The catch is this. The amount you can borrow will be assessed on the rental income the property would achieve if it was to be let on a traditional AST – rather than the possibly higher income the property may generate on a holiday let / Airbnb basis.

This is very common practice and offers a real cushion for the borrower, as if the property is going through a void period (winter for example) or perhaps holiday letting is just a lot tougher than you’d initially thought – letting the property on an AST can be your fall-back position.

I am very excited about the direction this lender is moving in and I expect many more to follow suit in the coming 12 months.

If you are interested in purchasing a property to let on an Airbnb basis, do get in touch.

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Call: 0345 345 6788

*2.99% 2 year fixed

Rate: Fixed at 2.99% for 2 years (to 31/10/2020) reverting to 5.11% (LIBOR + 4.5%) For purchases and remortgages. Overall Cost for Comparison: 5.1% APR. Loan to Value: 65% loan to value up to £1,000,000. Lender Arrangement Fee: 1.75% of the loan amount is added to the loan. Early Repayment Charges: An early repayment charge applies if you want to repay the mortgage early – 3% of the amount being repaid for the first year, then 2% until the end of year 2. RTI: Individuals - Higher of 145% of payrate or 5.5% notional rate. Limited Company - Higher of 125% of payrate or 5.5% notional rate. Assessment Fee: £125 payable on application. Broker Fee: We do not charge for initial advice. Our standard broker fee is £597 if we are able to get you an acceptable, formal mortgage offer from a lender. We will keep any commission payments made by the lender. Alternatively, we will rebate to you any commission paid by the lender to us and charge you a broker fee of typically 1% of the total loan amount (exact percentage will depend upon the size and complexity of the mortgage application). Repayment Options: Interest only or repayment options available. Income Requirement: None.