The Client: Already the owner of one vanilla buy to let property in her personal name, our client was looking to diversify and grow her property investment portfolio.
The Property: Seeking higher yields, our client was looking to purchase an established holiday-let property in Wales. The two-bedroomed apartment was situated near a popular seaside resort and also well positioned for those seeking a more rural break. Our client was also looking forward to being able to use the property themselves on occasion!
The Finance: With a 25% deposit, our client needed a holiday let mortgage to purchase the property.
The Challenge: The client had initially approached a lender directly; however, they declined the application on the grounds that she didn’t own her own home. Seeking guidance, the buy to let landlord approached us in February to find a solution. Concerns about the pandemic aside, our first challenge would be to secure the holiday mortgage for our client despite her not owning her own home. As some specialist buy to let lenders require you to own your own residential property, our choices in the market were restricted.
The Solution: After carefully reviewing our client’s circumstances, we felt that it was worth speaking to our contacts at the same lender our client had already approached. We were confident that she did meet their criteria, as although she didn’t own her own home, as an existing buy to let landlord she wasn’t a first-time buyer. After speaking to the lender ourselves, we were able to submit a successful holiday let mortgage application.
Like many mortgage applications in the Spring of 2020, things were not plain sailing despite having a formal mortgage offer! As the holiday let industry was forced to shut down during lockdown, our client requested that completion be delayed until such a time the property could be let out and income-generating. We spoke to the lender and made the argument that as the property was self-contained, it hopefully wouldn’t be long till it was once again lettable, and as an existing holiday let was highly likely to start generating income immediately. Due to these points and the exceptional circumstances, the lender agreed to delay completion for six-months, much to the relief of our client. Here are the details:
Property value: £260,000
Loan amount: £195,000
Rate: 4.04% fixed for 5-years
Term: 20-years, capital and interest
Mortgage payment: £1,185 per calendar month
Lender arrangement fee: £999
Rental income: £18,000 per annum
Gross yield: 7% per annum
Consultant: Robin Tait, 01625 416391
2nd December 2020