Can I Airbnb my home with a normal mortgage?

According to Airbnb, one third of UK hosts are renting out their homes to help cover the rising cost of living. But before you list your home with the goal of bringing in more money, check what your mortgage lender has to say. If not, you could face heavy penalties; here’s what to consider.

Can I rent my home on Airbnb with a standard residential mortgage?

Whether or not you can rent out your home on platforms such as Airbnb, depends on the terms set out in your mortgage contract.

Most homeowner (residential) mortgages will state that you cannot use your property for commercial purposes (which includes renting it out). If this is the case, then you won’t be able to rent your home on short-term holiday lettings sites such as Airbnb.

However, mortgage terms vary across providers so it’s always worth checking what your contract stipulates. For example, some lenders will allow you to rent out a room in your home as long as you stay in the property too. A handful of lenders including Metro Bank also allow you to rent your home on sites like Airbnb for up to 90 days.

In most cases, you’ll be expected to tell your mortgage lender that you intend to rent out your home. Under your mortgage conditions, you may even need to get ‘consent to let’ which might also mean paying a fee.

What happens if I do rent my home on Airbnb without my mortgage lender’s approval?

If you break the terms of your mortgage, you can face serious financial penalties. In the worst-case scenario, renting your home on Airbnb without approval from your mortgage lender can trigger an acceleration clause. This means your lender can ask you to repay the entire mortgage loan because you’ve breached your contract.

What type of mortgage will I need to rent on Airbnb?

If you’re buying a property specifically to rent out as a holiday let (including Airbnb), you’ll usually need a short-term holiday let mortgage.

Can I buy an Airbnb property with a buy-to-let mortgage?

Generally, no. Buy-to-let mortgages are aimed at properties rented over longer periods of time (typically a year). The loan amount is based on the potential income earned over the course of the rental period.

The income from short-term lets can be more volatile simply because income can fluctuate considerably across peak and off-peak times. This can lead to uncertainty and rental instability which is reflected in the terms of the mortgage.

Fundamentally, the type of mortgage you have must reflect how the property is being used. If you’re in any doubt, you should speak to your lender.

What should I do if I want to put my home on Airbnb?

The first step is to check your mortgage terms and conditions and follow any necessary procedures – such as asking for your lender’s consent to let.

If your mortgage doesn’t specify anything or isn’t clear about whether or not you can rent out your home, you should contact your mortgage lender before listing it as a short-term let.

Does Airbnb also affect home insurance?

Yes, just as listing your home or Airbnb can affect your mortgage, it can also affect your home insurance.

Typically, standard home insurance won’t provide cover for paying guests. That said, some mainstream insurers will let you add holiday let cover to your existing policy for a fee. Usually, you’ll need a specialist holiday-let policy which covers the increased risk of short-term letting.

Can I rely on insurance from the rental site?

Most holiday rental sites offer somesort of host insurance or host guarantee but before you rely on this, it’s important to understand the limitations.

Broadly, the guarantees that are included with many listings sites will only cover your property for the duration of each guest’s stay. You won’t be covered when the property is empty.

It’s also crucial to understand what exclusions there are. For example, exclusions in Airbnb’s host guarantee, include: “Mysterious disappearance, loss, or shortage disclosed on taking inventory, or any unexplained loss of inventory”. Exclusions also include fine art and other valuables that cannot be replaced like for like.

Bearing in mind the terms set out in the guarantee, you may find a specialist policy from an insurance provider offers more robust and comprehensive cover.

Home insurance tailored to your needs

Home insurance should reflect the risks your property faces – whether that’s because it’s rented out to a long-term tenant or as a holiday let. If your policy isn’t appropriate for your needs, your provider can reject a claim which means they won’t pay out.

To get a better understanding of what different policies there are, take a look at our home insurance and landlord insurance hubs, where we’ve put together a host of guides to help protect your assets as best you can.