Bridging finance to holiday let finance

Q

I have a question for you which I seem to be having difficulty getting answered!! It may of course be that the answer we want to hear, is not out there.

We have come to you because you are a specialist Mortgage Broker, with knowledge of financing holiday let and serviced accommodation properties.

My wife and I are looking to purchase a residential property, which will be let out on a holiday let basis. We have found a property and have already been accepted in principle, by a lender that offers holiday let mortgage products.

However, the lender’s valuer visited the property and came back with a zero valuation, due to the fact that the property was not in lettable condition on completion of the mortgage.

The property is being sold as a probate and was owned by an 80 year old lady. Consequently, it needs updating – full redecoration and a new bathroom would make it an ideal property, that would appeal to holiday makers. It’s a month’s work at most and because I own a plumbing firm I can install the bathroom at will.

My business partner suggested that we approach a Bridging Finance Lender, as they would probably help us. We need to borrow £250k to buy the property. He was quite correct, they said no problem – we’d need 40% deposit, the minimum time on the bridging facility was 30 days and it all seemed very easy. I noticed that the interest rate was slightly higher than other products, but thought that this was to be expected as the lender had to make some money somewhere.

We went back to the holiday let lender and told them our plan. They informed us that we must own the property for a minimum period of 6 months before they would consider a re-mortgage onto a long-term mortgage product!!

Somewhat put out by this, we found another lender in the holiday let market and put our case to them. They told us their lending policy prevented re-mortgaging a bridging loan, as this came under their debt consolidation policy.

Sorry for rambling on, but wanted to give you the full background, before getting to our question. Is there a lender out there that will give us a long-term holiday let re-mortgage, to repay a a bridging loan within 30 days?

Regards, Don

A

Don, This is a somewhat frustrating situation, which we come across all too often.

Some holiday let lenders won’t re-mortgage Bridging Loans. As you have found out already, those that do are likely to require the property to be owned for a minimum period of 6 months, which in your case will cost far more interest than is necessary.

All is not lost, however, we have a lender that should help, subject to your status, property valuation, type of property and projected holiday let rent. They may even base the amount they will lend you on the increased value of the property, due to the work that you have done. The additional funds over and above the amount of bridging facility might well be enough to cover the cost of the bathroom materials and redecoration costs.

We hope that this was the answer that you were looking for Don.