Our client was a UK citizen who already owns one Holiday Let property as well as his own residential property and was about to complete on another Holiday Let property. The client works as a Train Driver on a good income, with both basic plus overtime pay.
The client had Bridging Finance in place against his own residential property and used the funds to buy his first Holiday Let months earlier. He was wishing to now pay off the more expensive Bridging Finance (“exit the bridge”) with a remortgage on his residential home as well as secure a new Holiday Let mortgage for the new purchase.
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The client had sufficient equity in his residential property to remortgage and release sufficient equity for the deposit of the new Holiday Let property. However, before contacting us, the client had been trying for several months with other Brokers to secure the funding but had been unsuccessful. He has a high debt to income ratio and this was most likely the reason he had been struggling as he needed the equity from his residential to act as the deposit for the new Holiday Let.
Being a whole-of-market Broker, we have the knowledge to know that some Lenders internal credit scoring systems allow an application to be considered even where a client is highly “geared” – i.e. high debt to income ratio. So long as the credit score passes and the client have maintained their credit agreements to a satisfactory level, certain Lenders will still consider an application. In this particular instance, we were able to use a High Street Lender who accepted the client’s residential remortgage.
For the Holiday Let purchase, since the client already owned one and has a good income, we were able to secure him the best deal on the market for this, which fitted the Lender’s criteria perfectly. It was also beneficial that the client already has the onward purchase resolved as that can often hold up residential remortgages, as lenders’ wish to know the specific details etc.
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When trying to remortgage a clients’own residential home, it can be often be difficult when the client owns multiple properties and has a high debt to income ratio. However, options do exist, especially if all existing credit agreements have been well maintained.
Key things to consider for Residential Remortgages when raising funds to buy another property:
- Debt to income ratio.
- Good payment history.
- If you don’t have an onward purchase, most residential lenders will want to see one or at least know the details.
- If you already own a Holiday Let, and earn over £30k, you are in a good position with Lenders to be able to purchase another Holiday let.
- Just because you have had setbacks or issues, doesn’t mean it’s not possible – you just need to work with an experienced Broker.
If you have any questions about Holiday Let Mortgages, or would like a Free Quotation then please call us now on 03303 112 646 today. Alternatively please fill in our online enquiry form now and one of our Holiday Let Mortgage Advisors will call you back.