Remortgage of £2.3m Brighton holiday let

An existing client got in touch for help in refinancing a large Georgian townhouse which he wanted to start operating as a holiday let. The client is an experienced property developer who had originally purchased the Grade II listed house in November 2015 for just over £1m with the help of short term development finance.

When purchased, the house was in extremely poor condition and required extensive renovation including stripping the building back to its basic fabric and rebuilding using sympathetic techniques and materials in keeping with its period. Works finished, the accommodation is configured as a 5-bed family residence with a self-contained 1-bed flat at lower ground floor level. Both units can be combined to provide one holiday let if required.

Having spent nearly a year and the best part of £500k on the renovations, the client wanted to pay off the development loan and refinance onto a longer term, commercial mortgage. However, as the property had not been used as holiday accommodation before, we needed to find a lender which would accept projected income of £150k per year.

We approached several lenders for initial discussions and eventually went with a long-established building society which specialises in finance for holiday lets.

The valuation report concurred with our client’s rental income projections and so the society agreed to provide interest only finance for a 20-year term at a very competitive rate plus terms including overpayments of capital at up to £10,000 per annum without penalty. The application was processed without a hitch and the following deal was reached:

Property value: £2,300,000

Loan amount: £1,380,000

LTV: 60%

Rate: Bank Rate + 3.74%

Term: 20 years interest only

Borrower: Trading limited company

Mortgage payment:  £ 4,600 pcm

Lender arrangement fee: 1.60% of loan amount (£22,080)

Anticipated rental income: £150,000 pa

Gross yield: 6.5% pa

Consultant: Nick Helm 01732 471608

This is just one example of how we have helped secure finance for a client, if you have a similar scenario or something you'd like us to look at please get in contact with us on 0345 345 6788 or contact me directly at nickh@mortgagesforbusiness.co.uk.

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

30th January 2017