“There are many lenders who reject mortgaging Airbnb rentals altogether: MCAP, First National, several banks we deal with are not interested in considering any rentals where there is Airbnb income,” said Ron Butler, a mortgage broker in Toronto, who says underwriting departments see Airbnb income as risky.
Another complication for sellers and buyers hoping to make money with Airbnb is that when a typical residential property with rental income attached is purchased with a mortgage, most lenders will include a special contract in the loan referred to as an “assignment of rents” agreement. What the bank or lender is after is some protection for its investment – in the event that the mortgage borrower stops making payments, the rents paid by the tenant will be forwarded directly to the banks.
In those instances, “The assignment of rents clause is inoperative, or unenforceable,” Mr. Butler said. “I would suspect that fully, a third of [Airbnb units] are non-disclosed to a lender. The reality is the bank will never know, until and unless the person wants to do another mortgage transaction.” If a bank is looking, it could be easy to google an address to see if there’s an Airbnb listing connected, or to demand proof of a lease or rental receipts.
If you have a mortgage the banks should revoke your mortgage over Airbnb.