My Wife and I live in Berkshire and are both senior Civil Servants. We are looking for a lifestyle change, which involves a relocation to Cornwall. Our jobs allow us to work from anywhere, as long as we can be in London twice a week for meetings. Our idea is to purchase a property with a main house for our occupation, plus several converted outbuildings for us to run as a holiday let business.
We hope that when we eventually retire from the Civil Service, the holiday let business will provide a welcome supplement to our pensions and give us something to do! We have found a suitable property consisting of a main house and 4 holiday lets, all on one freehold title. The vendors already run a holiday letting business at the property and have provided us with 2 years accounts, if you need to see them. In the particulars of sale, it states that the converted agricultural buildings are restricted to holiday let use and they are tied to the main house.
We have accepted an offer on our current home, which took less time than expected to sell, so now we need to get moving on this. The purchase price of the Cornish property is £1.2 M and we need a mortgage of £375K. Our problem is that we cannot find a lender willing to lend us the money for this type of property.
We started with our local Bank Manager, who initially said that we need a commercial mortgage, then said that as we would be living at the property, the Bank would not lend to us at all.
We then tried to use a mortgage comparison website, to compare holiday let mortgages, but have drawn a blank with that as well.
Our questions are:
- What kind of mortgage are we looking for, residential, commercial or holiday let?
- How can we compare the mortgage rates?
We love this property and really need help!
We call these cases, mixed use holiday let mortgages, so part residential and part holiday let (commercial); multi-unit holiday let mortgage, is also a term that you will find used. The criteria used by specialist mortgage underwriters is too complicated for comparison websites to deal with effectively. Banks, unfortunately do not have the flexibility to allow you to live at the property.
This is the area for specialist lenders, that understand that there will be both residential and commercial use at the property. Understanding this situation, they can calculate affordability using both your earned and income from the holiday let business accounts. If accounts were unavailable, these lenders will use projected income from the holiday lets.
Depending on those figures, they will also consider loans that go beyond your retirement date, if you require. Some degree of interest only mortgage lending may be allowed. The fact that the outbuildings on this property are restricted to holiday let use and are on the same title deed, means that you will pay a slight premium on the mortgage interest rate, but it should not be too much.
We work on this sort of specialist case, fairly frequently at Holiday Let Mortgages and our relationships with those specialist lenders is strong. It’s a bit old fashioned, based on relationships, trust and “who you know”.
Because the mortgage underwriting is done by real human beings, not a computer system, it can be very quick and flexible.