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Bridge to Let – Case Study

The Client:

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.

Contact us today to discuss Holiday Let Mortgages and how we can assist you.

The Scenario:

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.  

Discover our Holiday Let Mortgage Broker services.

The Solution:

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.

Summary:

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.

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Residential Remortgage & Holiday Let Purchase – Case Study

The Client:
Our client was a UK citizen who already owns one Holiday Let property as well as his own residential property and was about to complete on another Holiday Let property. The client works as a Train Driver on a good income, with both basic plus overtime pay.

The client had Bridging Finance in place against his own residential property and used the funds to buy his first Holiday Let months earlier. He was wishing to now pay off the more expensive Bridging Finance (“exit the bridge”) with a remortgage on his residential home as well as secure a new Holiday Let mortgage for the new purchase.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

The Scenario:
The client had sufficient equity in his residential property to remortgage and release sufficient equity for the deposit of the new Holiday Let property. However, before contacting us, the client had been trying for several months with other Brokers to secure the funding but had been unsuccessful. He has a high debt to income ratio and this was most likely the reason he had been struggling as he needed the equity from his residential to act as the deposit for the new Holiday Let.

The Solution:
Being a whole-of-market Broker, we have the knowledge to know that some Lenders internal credit scoring systems allow an application to be considered even where a client is highly “geared” – i.e. high debt to income ratio. So long as the credit score passes and the client have maintained their credit agreements to a satisfactory level, certain Lenders will still consider an application. In this particular instance, we were able to use a High Street Lender who accepted the client’s residential remortgage.

For the Holiday Let purchase, since the client already owned one and has a good income, we were able to secure him the best deal on the market for this, which fitted the Lender’s criteria perfectly. It was also beneficial that the client already has the onward purchase resolved as that can often hold up residential remortgages, as lenders’ wish to know the specific details etc.

Discover our Holiday Let Mortgage Broker services.

Summary:
When trying to remortgage a clients’own residential home, it can be often be difficult when the client owns multiple properties and has a high debt to income ratio. However, options do exist, especially if all existing credit agreements have been well maintained.

Key things to consider for Residential Remortgages when raising funds to buy another property:

  • Debt to income ratio.
  • Good payment history.
  • If you don’t have an onward purchase, most residential lenders will want to see one or at least know the details.
  • If you already own a Holiday Let, and earn over £30k, you are in a good position with Lenders to be able to purchase another Holiday let.
  • Just because you have had setbacks or issues, doesn’t mean it’s not possible – you just need to work with an experienced Broker.

Summary:

Being a whole-of-market Broker, we work with ALL Lenders including the Specialists. If you have any questions about Holiday Let Finance &/or wish to speak with one of our Specialist Holiday Let Mortgage Advisors for a Free quotation, please call 03330 169 003 today or complete the short enquiry form.

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Holiday Let Case Study

The Client:

The client was looking to refinance a former Residential property that has been used as a second home.

The Scenario:

The value of the property was £600,000, but with the AST rental figure only being £1,400 per month, they wanted to explore ways of earning a higher income from the property.

Due to its coastal location, the property was confirmed to be ideal for use as a Holiday Let, so the client wanted to remortgage onto a specialist Holiday Let mortgage.

Contact us today to discuss Holiday Let Mortgages and how we can assist you.

Some lenders, although offering holiday / short term let products, still assess the maximum loan affordability off the AST rental figures, which was limiting the loan to approximately £400,000 on a 5 Year fixed rate. However the client wanted to raise 75% LTV to enable them to invest in more property, whilst only fixing their rate for 2 Years.

The Solution:

The remortgage was subsequently placed with a specialist lender who was able to use Holiday Let rental figures to establish affordability, which were much higher than the AST rental income figures.

The client had to go away and obtain a valuation from a local/regional holiday let expert who would need to confirm the average weekly rental in the low, mid and high seasons. The lender would then take an average of these over a 30 week period to use as the annual income. The figure resulted in £1,200 weekly average which over 30 weeks came to £36,000 annually as opposed to the AST rental figure of £16,800 per Year.

Discover our Holiday Let Mortgage Broker services.

The higher Yearly income figure allowed the client to secure a 2 Year fixed rate mortgage at 75% LTV with an interest rate of 3.29%, whilst raising an additional £50,000 out of the property to go towards their next investment.  

Summary:

Being a whole-of-market Broker, we work with ALL Lenders including the Specialists. If you have any questions about Holiday Let Finance &/or wish to speak with one of our Specialist Holiday Let Mortgage Advisors for a Free quotation, please call 03330 169 003 today or complete the short enquiry form.