Our experienced portfolio landlord wanted to expand their investment properties by purchasing a new-build penthouse apartment. Read how we assisted them in navigating the challenges of complex affordability calculations.
At a glance:
- Financing a holiday let property
- Secuing a 75% LTV hoiday let mortgage
- Navigating the lender market to find the best deal
The Case:
A couple looking to invest in a holiday let property together. The husband was a working professional with a strong income, and the wife an extremely experienced portfolio landlord with an existing holiday let amongst her other rental properties.
They planned on purchasing a three-bedroom, new-build penthouse apartment. With stunning far-reaching views of the North Sea and finished to a high standard, the property was sure to generate significant demand from holiday letters. In order to do this, our clients needed a 75% LTV holiday let mortgage to purchase the property.
The Challenge:
One typical challenge with seeking finance for holiday let properties is the rental affordability checks. As holiday lettings are still a niche (but growing) sector, most lenders assess affordability like they would for standard buy to lets. Assured Shorthold Tenancy (AST) earnings are often much lower than that of holiday let earnings, and as such, some clients face difficulties in accessing the full loan amount required to purchase higher-value properties.
Similarly, many of the lenders within the holiday let space have a restriction on the loan to value for new-build apartments. This is typically 65% LTV, whereas our clients sought finance at 74% LTV.
Both these challenges meant that it was essential we found an appropriate lender with whom to place this case.
The Solution:
Our particular expertise in the holiday let sector made these challenges much easier to overcome. We retrieved a holiday letting income projection letter from a reputable agent to show to the valuer, who agreed with the figures produced. This gave us the correct income projections and allowed our client to access the full required loan amount. We were also able to quickly identify a lender that is happy to offer up to 75% LTV on new-build properties.
When presented with the full mortgage offer, our clients were happy to proceed.
Here are the details:
The Finance:
Property value: £908,000
Loan amount: £675,000
LTV: 74%
Rate: 4.69% 5 years fixed
Term: 25 years, interest only
Mortgage payment: £2638 per calendar month
Lender arrangement fee: Free
Rental income: £5,250 per month (projected income)
Gross yield: 7% per annum
Application: Individuals
Next steps
Find your next commercial mortgage
Are you looking to secure a holiday let mortgage? Head over to our easy-to-use buy to let mortgage calculator to compare rates or get in touch with one of our expert mortgage brokers.
