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There is a lot of noise on the mortgage front today as NatWest updated its mortgage terms to make them more Airbnb-friendly. But what does this mean exactly and why was it necessary in the first place?
What is an Airbnb-friendly mortgage?
The first thing to know here is that an Airbnb-friendly mortgage is not a Buy to Let mortgage. It is not designed to allow you to operate a full-time airbnb all year round. Instead, what NatWest have done is update their terms to allow more flexibility for borrowers to make money from their home on a part time basis.
How have NatWest’s terms changed?
In the past, if you wanted to rent out a room in your home – or rent out your entire home while you were on holiday – you would need to apply to NatWest for something called a ‘Consent to Let’. Not only did you have to apply for this, you also had to pay a fee for it! There was no guarantee that your request would be granted and this lack of flexibility was frustrating for borrowers.
With NatWest’s new more flexible ‘Airbnb-friendly’ terms, borrowers will now be aliowed to rent out a room in their home – or even their entire home – for up to 90 days in each rolling 12 month period. They can now do this without having to apply and pay for a Consent to Let.
This change to NatWest’s mortgage terms could come as a welcome relief to cash-strapped borrowers who have been hit by rising interest rates. Renting out all or part of your home on airbnb could raise £1000s of pounds per year. This could go a long way in funding your annual mortgage bill. In more extreme cases it could even stop you from losing your home if the payments have simply gone up to an unaffordable level.
Are NatWest the only lender to offer Airbnb friendly mortgages?
While NatWest when launching their new terms encouraged other lenders to follow suit, it’s worth mentioning that they are not the only lender to have taken the step of updating their mortgage terms to make them more Airbnb-friendly. Halifax, Metro Bank and Barclays, for example, have also updated their terms in a similar way.
Are Airbnb-friendly terms available for all borrowers?
It’s worth mentioning too that these terms are not always available to all borrowers. Many lenders only offer these terms on mortgages with a maximum loan to value of 75{c87e2df4b343d0515d304e127afe4653a549475791ab451641a18e09bd64e760}. So be sure to check the terms and conditions thoroughly before applying to ensure they are suitable for your needs.
How long can I let my home out for?
There are also restrictions on the length of time you can rent out all or part of your home for. These restrictions often mean you can only rent all or part of your home out for between 3 and 4 months – 90 to 120 days – in any rolling 12 month period. While this might be suitable for some, it does mean that you wont be able to spend the majority of the year abroad and only come back for a few months of the year.
Do I have to use Airbnb?
There is one other condition that is often attached to an Airbnb-freindly mortgage and this is implied in the name. Most lenders will require you to use a reputable company or website to rent out your home. Airbnb will obviously be one such company. For others, you may want to check with you lender first before going ahead.
We hope you’ve found this overview of the new NatWest terms useful. If you have please do check out our other mortgage related content.
Will you benefit from the new NatWest Airbnb-friendly mortgage terms? Let us know in the comments section below!