The clients were new landlords who wanted to specialise in the Holiday Let market. They had a good background income and had highlighted key areas to invest in to begin the holiday let business. Their credit report was clean, and the plan was to build a portfolio of properties to become self-employed and focus on running the Holiday Let business.
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An opportunity arose to purchase a cottage style building in Oxfordshire in an area where there was a strong tourist demand. The client was aware that the property would need to undergo a full internal refurbishment and therefore needed flexible funding that allowed these works to be carried out. The plan would be to then refinance the property at the improved value where the Holiday Let rental could be used for mortgage affordability. The client had already been in touch with local holiday letting experts to ensure the potential yield would be suitable to fit in with their business plan.
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Due to our experience with enquiries where property refurbishment is required, we knew a Bridging Loan would be the correct product to use. The client had advised that the works would take 3 months, therefore we were able to source an incredibly competitive bridging product for the client, which offered a 9 month term and no exit fees. 6 months interest were retained, and the final 3 months were serviced meaning that on day one, 6 months interest payments are deducted, or prepaid, then the clients’ income was strong enough for the lender to allow for months 7-9, they could cover the monthly payments. This allows the lender to provide a larger net loan in day one, rather than traditionally deducting all 9 months interest in advance.
Following completion of the works, we sourced a low 5 Year fixed interest rate for the client which provided them with a 75% Loan to value mortgage of the improved property value, with a lender that used a 32 week average of the low, middle and high season weekly Holiday Let rental estimates for affordability purposes. As the client had finished the works and refinanced within 5 months, the 6th month of interest that had already been prepaid was also taken off the redemption figure when refinance, providing the client with more of their initial funds back.
Bridging Finance has many advantages ensuring you keep on top of your timeframes by providing flexibility to allow the works to complete and release funds from the property in a timely manner compared to a traditional Buy to Let Mortgage.
Please get in touch today with our dedicated team of Specialist Mortgage Advisers for any Bridging Finance or Holiday Let enquiries or questions you might have. Call us now on 03330 169 003. Alternatively, you can also fill in this short online form and we will get back to you straight away.