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Investing in serviced accommodation (SA) can deliver significantly higher returns compared to traditional buy-to-let properties, thanks to the growing popularity of platforms like Airbnb and Booking.com. However, traditional buy-to-let mortgages rarely cater for this short-term rental market, prompting the rise of specialised serviced accommodation mortgages.
This guide outlines everything property investors need to understand about SA mortgages, including how to secure finance, lender criteria, benefits, and potential pitfalls to avoid.
A serviced accommodation mortgage is a specialist loan designed specifically for properties let on short-term or nightly stays rather than traditional long-term tenancies. Unlike standard buy-to-let mortgages, lenders offering SA mortgages accommodate flexible occupancy, seasonal fluctuations, and variable income streams.
Investors are increasingly attracted to serviced accommodation for several compelling reasons:
Serviced accommodation mortgages often require more detailed underwriting than traditional buy-to-let products. Lenders commonly assess:
While the SA market is specialised, several lenders actively provide finance:
Each lender offers varied criteria, rates, and terms, so comparing your options with an experienced broker is highly recommended.
Investor: Sarah, London
Property: Two-bedroom city-centre apartment
Purchase Price: £250,000
Deposit: £75,000 (30%)
Mortgage: £175,000 (Serviced Accommodation Mortgage with InterBay)
Outcome:
Sarah’s property achieves an average monthly income of £3,500 via Airbnb, significantly higher than the traditional monthly rental income of £1,200. After mortgage repayments, management fees, and running costs, Sarah nets a profit of around £2,000 per month, delivering a strong ROI and greater flexibility in managing her investment.
A: Typically, no, as traditional lenders restrict short-term lets. You need a specialist serviced accommodation or holiday let mortgage
A: Usually between 25% and 30%, depending on the lender and property location.
A: Yes, but the choice of lenders is limited. Providing detailed market research or working with an experienced broker will enhance your chances.
A: They can have slightly higher rates than traditional buy-to-let mortgages due to perceived higher risks and management intensity, but the increased returns often offset the extra cost.
Ans: Yes, Catalyst allows early repayment without penalties, potentially saving you interest costs.
At Auction Finance, we specialise in helping investors secure specialist serviced accommodation mortgages. Whether you're experienced or new to short-term rentals, our team will guide you through the entire process.
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