• Skip to main content
  • Skip to site footer
Holiday Let Mortgages

Holiday Let Mortgages

  • Home
  • MORTGAGES
        • Holiday Let Mortgage Broker

          We have been specialising in holiday let mortgages since 2006 and have accumulated a deep understanding of all types of holiday let finance.

        • Holiday Let Mortgages
        • Holiday let remortgages
        • Buying a holiday home
        • Expat Holiday Let Mortgages
        • Mixed & Multi-Unit Holiday Lets
        • Guest House Mortgages
        • Deposits
        • Holiday Park Mortgages
        • Development Finance
        • Review Service
        • Mortgage Guide
        • Mortgage Criteria
        • Holiday Let Tax Rules
  • INSURANCE
  • ABOUT US
        • Holiday Let Mortgages is an Independent Mortgage Broker specialising since 2006 in mortgages for holiday let properties.

          This means that we are free from any outside influences in terms of where we can go to get you the best mortgage rates and deals available.

        • About Us
        • What We Do
        • Review Service
  • CONTACT US

Specialist INDEPENDENT mortgage brokers – ☎ 020 8301 7931

  • Guides
        • HOLIDAY LET GUIDES

          We have a lot of resources to help you with your holiday let. There are quite a few guides plus many articles on how we can help people successfully invest in a holiday let property.

        • Holiday Let Mortgage Guide
        • Holiday Let Mortgage Criteria
        • Buying a holiday home for investment
        • Holiday let property guide
        • Guide to UK Holiday Lets
        • Buying a holiday home in the UK
        • Jargon Buster
  • Calculators
  • Articles
        • HOLIDAY LET ARTICLES & CASE STUDIES

          There is lots of useful information in our article and case study sections. Built up over many years we share new developments in lending attitude and also client case studies for the more difficult holiday lets!

        • Articles
        • Case Studies
        • Q&A

Holiday let ‘live/work’ case study

You are here: Home / Case Studies / Holiday let ‘live/work’ case study
At Holiday Let Mortgages, we deal with many different types of mortgage enquiries as you can well imagine; single archetypical white walled cottages, multiple dwelling part commercial/part residential properties and entire holiday parks, are all in our business mix. We enjoy the simple, but thrive on the work involved in the more challenging, complex mortgage cases we come across.
If you have looked at our holiday let mortgage case studies or Q&As, you will notice quite a few multi unit/trading business holiday let cases.
This is our most recent, where the mortgagor intends to live/work at the business.

We received a new enquiry from a customer looking for a way to finance the purchase of an existing part residential/part commercial holiday let business. He told us that he’d already spoken to his Bank, but they had told him that trading holiday let businesses were not an area of business lending that they were active in.

JP told us that he had recently sold a business and was looking for a new challenge. He had found a trading holiday let business in Torquay on sale at £1.2m, which consisted of 11 leasehold flats, which in turn formed part of a multi -unit freehold block with full residential use in the planning. JP told us that he intended to live in one of the flats and manage the remaining 10 flats as a holiday let business and this was to be his only source of income. He would use the sales proceeds of his current home as deposit for the purchase but would still need to borrow £400k to complete. At that point he was using the sales proceeds of his previous business to support himself.

As part of the sale, the business came with a website that provided all of the current occupancy/availability information and the vendor, although not resident, dealt with change overs and logistics rather than using an agent. Full trading accounts were also available and showed a pre-tax net profit of £120K (based on letting 11 flats), but as the current vendor had no finance secured against the property, there was no need to notionally add back interest payments to the bottom line. Because JP intended to occupy one of the flats himself, we told him that the underwriter would add reasonable costs to cover his occupation and deduct notional business revenue for that flat from the figures provided by the vendor’s accountant when assessing the affordability of the loan.

JP said that he intended to increase the income the flats were generating by refurbishing them to 5 star standard, at a cost of approx. £50K and we advised him that the underwriter would rightly see the potential for an interruption of business income, so would require evidence of savings in the background to cover the loss of income. Additionally, we told him that because he was to occupy less than 40% of the square footage of the property, the loan application would be classed as non-regulated under FCA rules, allowing more freedom for an underwriter to apply a common sense approach to the assessment of the business income.

Because this was a trading business with full trading accounts available, the lender did not require JP to have unrelated income from other trade or profession and asked JP to provide:

  • a business plan for the target purchase
  • proof of deposit
  • proof of savings
  • 3 Years Profit and Loss accounts for the target holiday let business
  • an up to date CV
  • 3 months personal bank statements
  • last set of accounts for his recently sold business
  • evidence of sale proceeds of his previous business

Once we received the information, we could see that JP’s previous business had been well run and his CV was of the right calibre for an underwriter to feel confident in his ability to run the target business optimally. Moreover, because JP was able to evidence that he enough in existing savings to support the loan whilst the flats were being stage refurbished, an underwriter would not insist on the all the flats being ready for letting immediately, thereby allowing JP to go ahead with his proposed improvements once the property had been purchased.

We submitted the case for JP and received an agreement in principle the same day.

Category: Case StudiesTag: commercial holiday let, commercial holiday let mortgage, live work holiday let

Let’s work together

Get in touch with us and send some basic info about your project.

Get in touch!

CONTACT US

Holiday Let Mortgages

1st Floor, 140 Long Lane
BEXLEYHEATH
DA7 5AH

T 020 8301 7931
E mortgages@holidayletmortgages.co.uk

QUICK LINKS

Holiday let mortgage guide

Guide to UK holiday lets

Holiday let mortgage criteria

Holiday let articles

Holiday let tax

WE LIKE TO TALK

Please contact us whether you have found a property or project that needs financing or you are just in the early stages of forming a plan.

It’s often an advantage to discuss the financial side of a deal before everything has been agreed. So please call us on 020 8301 7931 and tell us your holiday let ideas.

Copyright © 2020 · Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Broker fees may apply. Written details on request. All loans subject to status. Think carefully before securing other debts against your home. The Financial Conduct Authority does not regulate holiday let mortgages. Holiday Let Mortgages is a trading style of Drake Mortgages Limited and this website is owned and operated by Drake Mortgages Limited who are authorised and regulated by the Financial Conduct Authority FCA Register No 207532 | Privacy | Terms