5 Ways a Mortgage Broker can assist you in getting your Airbnb property

Airbnb is becoming increasingly more popular for not only people looking for accommodation, but for people wanting to use Airbnb as a second source of income.

Savvy property investors are now identifying that short-term rentals can possibly provide a higher return on investment rather than traditional, permanent rental arrangements.

However, before adopting this strategy and buying a property, you need to consider if it’s right for you, particularly from a financial point of view. This is where a mortgage broker can help.

Here are my top 5 tips on how a mortgage broker can help your Airbnb strategy.


1. Obtaining the finance and getting a competitive rate

As soon as you consider making a purchase, you should speak to a mortgage broker to ensure you’re in a strong financial position to achieve your goals.

Our role is to assess your needs to work out your borrowing capacity as well as exactly how much the property will cost you. This is important because you’re able to search for your ideal property based on what you can actually afford, saving you time and stress. We will also measure your loan servicing capacity, which simply means that you are able to pay back the loan.

From here, we will help you find the most suitable lender with the most competitive rate for your situation. They can also structure your loan debt to allow you to control your repayments.

If you already have a mortgage on an existing property, it’s always beneficial to see if your mortgage broker can get you a more competitive rate, which will decrease your expenses and help you purchase a new property.


2. Actual Repayments

When your application is being assessed, most lenders use a higher interest rate (assessment rate) to review your ability to repay the loan. Essentially, lenders apply a worst-case scenario in case the rates do increase. This can sometimes halt your application from proceeding.

However, a good mortgage broker has access to specialist lenders who measure your actual repayments rather than the assessment rate. This could be the difference between you purchasing a property to rent out on Airbnb, or not. This ultimately is going to affect how much you are able to borrow.


3. Acceptable rental incomes

Many lenders will not accept Airbnb rental as an acceptable form of income. Therefore, they might not approve the loan.

An experienced mortgage broker can help you narrow down other options and identify which lenders are happy to consider rental income from Airbnb.


4. Under 45 square meters

Something most people don’t know is that many lenders restrict purchases for units that have under 45 square meters of internal space (excluding the balcony). This is often a popular configuration for owners that purchase units to rent on Airbnb due to the lower start-up costs.

The benefit of going to a mortgage broker is that they will know which lenders can accept applications for units under 45 square meters.


5. High Density Areas

The lending climate is changing and most lenders have flagged certain suburbs as being high density areas, which means they won’t approve loans in these suburbs. If you are planning to buy in a suburb which has experienced huge development growth in recent times, it’s always good to contact a mortgage broker to find out if your property might be affected.

Your mortgage broker will be able to see if you can obtain a loan with a bank that looks more favourably on your suburb.


Please note: These are hypothetical strategies and each strategy needs to be tailored on a case to case basis. Please consultant your solicitor, accountant, insurance specialist and financial planner before making any purchases.


This article was written by Kyle Weltman from Cane Financial. Cane Financial are a boutique Mortgage Broking business with over 100 years’ combined experience.

If you would like to learn more about how a mortgage broker like Cane Financial can help enhance your Airbnb investment complete the form below.