As experienced landlords and holiday let owners, our clients were looking to add to their property portfolio with an additional holiday let purchase in the highlands. We helped them secure funding to support their deposit.
At a glance:
- Capital raise to support depsit funding
- Experienced holiday let landlords expanding their portfolio
- Overcoming lender reluctance due to property location
The Case:
Experienced landlords and holiday let owners were looking to purchase a multi-unit property located in the Scottish Highlands. The property comprised of a detached house, detached garage, and a detached cottage and was ideally located, with access to local amenities such as shops and transport facilities for visitors to use.
Our clients had a substantial background income from their day jobs, making them ideal applicants to lenders. Looking to purchase this property, they required funding to support their deposit.
The Challenge:
The case created two challenges for us, the initial being the deposit source. As experienced landlords, our clients wanted to use a Further Advance to capital raise on one of their existing Scottish holiday let properties as a deposit. Despite the fact this property had increased in value following refurbishments, our clients only completed on the purchase during the 2021 COVID lockdown. This meant that it lacked evidence of letting income, meaning lenders were wary of this as a source of secure funding.
The second challenge we faced was that the Highlands location meant limited lender appetite and availability. With very few lenders happy to offer on properties in this area, our options were restricted.
The Solution:
Our experience and expertise in Holiday Lettings meant that we knew to get in contact with a reputable holiday let agent local to the area. The agent used their professional opinion to work out projected holiday lettings income for both properties, which worked out at £36,000 per annum for their existing property and £60,000 per annum for the new purchase. With these projected earnings presented to our clients’ current lender, they were happy to offer a loan for the purchase. Here are the property details:
The Finance:
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Property one: Further Advance Property value: £400,000 Further advance amount: £84,850 LTV: 21% Rate: 3.99% five-years fixed Term: 14 years (interest-only) Mortgage payment: £282.13 per month Lender arrangement fee: £999 Rental income: £3,000 per calendar month. Gross yield: 9% Application: Limited company |
Property two: New Purchase Property value: £450,000 Loan amount: £337,500 LTV: 75% Rate: 4.84% five-years fixed Term: 15 years (interest-only?) Mortgage payment: £1,361.25 per month Lender arrangement fee: £999 Rental income: £5,000 per calendar month Gross yield: 13% Application: Limited company |
Next steps
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