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If you own a holiday home or an Airbnb and are thinking about putting it up as security against a secured loan, you may have some questions about how it all works.
The process is fairly straightforward, with rental income, property value, ownership and residency all taken into consideration by lenders when they assess the application.
We explain what lenders generally tend to look for when it comes to Airbnb and holiday lets, so you have a better idea of what to expect during the process.
People can apply for secured loans and use their holiday homes as security, which allows them to raise cash for things like home improvements or any other purpose.
Some see it as an alternative to remortgaging, as it allows them to access the equity in the property without impacting their existing payments.
Depending on a few different factors, interest rates may be higher for these types of loans, which helps to balance out the risk for lenders.
This works in a similar way to buy-to-let secured loans, as lenders will either use your rental income, projected rental income or your TSDI (total secured debt to income) to assess your affordability.
If you have received rental income for at least two years, lenders tend to apply an occupancy rate of up to 80% for their calculations.
For holiday homes that have not yet established a rental income, lenders will accept projected income and a lower occupancy rate (which is often around 50%). To ensure accuracy, the lender may also ask you to provide low, mid and high season rental income figures that have been verified by a letting agent.
Alternatively, lenders may use something called a TSDI calculation. The general rule is that the total payments you make towards servicing secured debts should not exceed 50% of your net income or profit.
However, there are some lenders that will have higher limits in place (not just for TSDI calculations but also for occupancy rates), which will depend on your individual circumstances.
Before a lender makes a final decision about how much you can borrow, they will usually take into consideration:
Some lenders may have minimum loan sizes and maximum loan-to-value limits in place, so before you start your search, it’s a good idea to calculate how much you need and the amount of equity available in your holiday home.
If you need help calculating your LTV or finding a loan that fits in with your budget, you can speak with a member of the Willows team who will be able to help.
Lenders tend to view Airbnb properties in the same way as holiday lets, so this shouldn’t cause any issues in the first instance.
The eligibility criteria is slightly different compared to standard holiday lets, as lenders typically want to establish that:
If you need more clarity about using an Airbnb property as loan security or have a more specific question you need answered, feel free to get in touch with our advisors at any time.
The option of using a holiday park property as loan security can present more of a challenge for lenders, which can make the application process more complex.
However, some specialist lenders may be willing to consider this type of property, depending on your financial circumstances. Please note that if the property is a caravan or a structure designed to be movable, such as certain cabins, we are unable to assist.
As your first port of call, we’d suggest getting in touch to tell us more about the property and your loan requirements, which will allow us to guide you in the right direction,
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We’re extremely proud to be rated ‘Excellent’ for our service standards. We’ve helped thousands of customers across the UK over the last 15 years to find the right finance for their needs – no matter how complicated the circumstances. And we look forward to helping you.
Even though there are lots of deals available online, there may be even more that you are not aware of. Working with an experienced broker can give you access to a host of specialist offers that can be tailored exactly to your needs. The Willows team uses their knowledge, expertise and lender contacts to help you find the best deal and terms for you.
Once we learn more about your circumstances, we can quickly match you with a lender that has experience working with holiday lets and Airbnb properties. To find out more, or if you have any questions you need to ask, get in touch with the Willows team on 01656 766 158 and we’ll be more than happy to help.
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LOANS ARE SECURED AGAINST PROPERTY. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED UPON IT.
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At Willows Finance Ltd, we appreciate that your privacy is extremely important to you. With this in mind, we have put in place a number of measures to ensure that any personal details we obtain from you as a result of visiting this website is processed and maintained in accordance with accepted principles of good information handling and also in accordance with the Data Protection Act 1988.
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Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Authorised and regulated by the Financial Conduct Authority
Firm Reference Number: 670052
Company Number: 6678545 (Registered in England and Wales)
This document outlines the services we provide. If you need clarification, please contact us at 01656 766158.
We offer first and second charge regulated mortgage contracts for business or personal use.
Other finance options may include:
Regulatory Status:
We offer an advised mortgage broking service and provide enough information for you to make an informed decision.
We are not independent financial advisers. Free debt advice is available from the Money Advice Service.
You can view our privacy policy at: https://willowsfinance.co.uk/privacy-cookie-policy/.
Lenders may also have their own privacy policies which will be provided to you.
We charge a broker fee upon loan completion. The average fee is approximately 5%, depending on your situation.
Fee details:
No refund is offered after completion. You may pay upfront or add the fee to your mortgage. Fees and commission will be detailed in your ESIS and Mortgage Agreement.
You will receive a Mortgage Agreement and an ESIS document detailing:
You may cancel your application anytime before completion without any charge. Mortgages cannot be cancelled after completion.
Missing payments can lead to charges, repossession, and negative impacts on your credit rating.
Consolidating debt may result in higher long-term interest. Securing debt against your home increases risk.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.
If you wish to complain, contact us at:
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Tel: 01656 766158
You may be able to refer your complaint to the Financial Ombudsman Service.
We are covered by the FSCS. You may be eligible for compensation of up to £85,000 per person per firm for mortgage advice and arranging.
More info: www.fscs.org.uk
After processing your application, you’ll receive a Mortgage Agreement and have a 7-day reflection period.
Contact us during this period with any questions. To proceed, sign and return the agreement.
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