Q
I have a holiday let remortgage question for you, as quite frankly can’t seem to find the answer myself.
Here’s the brief.
Last year we inherited some money. My wife and I have always liked the tangibility of property. Our accountant made us aware of the diminishing return on buy to let, due to the Govt using HMRC as the means to cool the market. It’s worked!
He suggested an alternative, that being investment in furnished holiday let. He said that providing that we complied with the HMRC FHL rules, the tax position would be favourable in comparison to buy to let. We liked the idea of this, especially because it allowed for our occasional use too.
My wife found the perfect property for holiday letting in Dorset and we managed to secure it. We used our savings, plus the money that we had inherited, to cover the full purchase price of £600K. At the time, we suggested to our accountant that we take out a £200-£220K holiday let mortgage and retain some of our savings, as the kids might need some financial assistance at some point to help buy their own properties.
Our accountant said that there was no point paying interest on a loan, when we could get the money back, by a re-mortgage, at the point that it was required. This seemed a perfectly reasonable piece of advice to us.
A year on with the kids are now talking about house purchases etc, we thought that it was probably time to get our savings back. I used one of those money supermarket sites, found a couple of numbers for lenders that offer holiday let remortgages, thinking it would be easy at below 50% loan value.
Both lenders that I spoke to, told me that replenishment of savings was not allowed under their capital raising rules. We have now realised that what we should have done was to take the mortgage of £200K mortgage at the time and used it for the purchase, then the problem wouldn’t exist.
The question is, as a specialist in holiday let mortgages, do you have anyone that can help us?
Roderick
A
Hello Roderick
Pleased that you found us, as this kind of work is where we are a real asset to our customers. Many of the lenders that offer holiday let mortgages and re-mortgages to the public on their websites, have standard lending criteria, frequently poorly explained, with no flexibility to cover anything that isn’t totally standard. So a good case that passes commonsense, such as yours, will just fail.
We have a close relationship with one lender that does take a commonsense view on a variety of non-standard propositions. We can put your case to them and a real human being, not a computer, can look at the pros and cons. Our experience says that your case should pass a commonsense check. You will of course have to pass the routine mortgage questions, such as clean credit, house is structurally sound etc.
If you would like to call the office and speak to Mark, he will talk you though the next steps.