Couple with no property investment experience purchase holiday let
The client: A married couple from Northumberland looking to purchase a holiday let via their trading limited company. Both husband and wife run a medical consultancy business working as doctors. Neither have any property investment experience.
The property: A three-bed detached house overlooking a picturesque coastline in Northumberland. A popular spot with tourists, this property sits between two successful holiday parks.
The finance: Using savings from their company as a deposit, the pair needed to borrow an extra £238,000 to make the purchase.
The application: We approached a building society based in the north of the UK, which is often willing to take a view on applicants with no property investment experience.
After discussing the case with their business development manager, we worked with the clients to collate the documentation needed to support the application. This included proof of ID, latest payslips, recent bank and mortgage statements and projected rental income figures from a local agent.
Unfortunately, during the affordability assessment phase, a spanner was thrown into the works. Due to the costs involved with servicing a holiday let, the lender was not comfortable that the property would meet the required income cover ratio. Luckily, we had a plan.
With both applicants receiving a high income, we asked the lender if it would consider top-slicing. Top-slicing is where a lender uses the borrower’s personal income to top up any shortfall in rent which is needed for the borrower to obtain the required loan amount.
To our and the client's delight, the lender accepted on this basis. An offer was made in three weeks.