Funding Your Holiday Let Purchase
Friday 22nd March, 2019 by Host & Stay
Funding for Serviced Accommodation and Holiday Let properties in North Yorkshire is considerably different to normal BTL funding, and you should certainly seek the advice of a good commercial mortgage broker when assessing the options that you have.
Unlike traditional BTL funding where the lender will almost certainly prohibit the use of the property for short-letting and holiday letting – a number of commercial funders will allow short-lets and there are a handful of lenders that have specific holiday Let mortgage products.
The selection of lenders available is much smaller than the traditional BTL marketplace, and the criteria for funding is often more stringent and can also be more expensive.
From our own experiences, lenders that will look at Holiday Let funding are typically Building Societies, and we have worked with and had success with the following lenders:
Cumberland Building Society – minimum asset value of £150,000 and LTV’s up to around 70/75% LTV. They do like repayment over interest only. Cumberland will want to see proof that the property currently performs as a holiday let, and if that isn’t the case, then they will want to see proof of projected income from a certified holiday let managing agent such as Host North Yorkshire.
Aldermore – notoriously slow, but are one of the only traditional commercial lenders that will look at Holiday Let funding. They will typically assess the deal based on the single let rental income and not the holiday let income. They will fund up to 75% of the assessed value, and rates will typically be more expensive than a standard BTL mortgage product.
Lenders are also now starting to review whether the property they are funding is being used as a traditional holiday let, or whether the property is being used for an SA (Serviced Accommodation) model.
A well-qualified broker will be able to guide you on what each of their lenders will look for, and this will help support you when selecting the right lender for your strategy. If you have a “traditional” holiday let property, then this should be relatively straight forward, if you’re running a high turnover SA (Serviced Accommodation) unit, then it is worth researching lending options in detail to ensure the lender isn’t going to uncover something that they don’t approve of.
Although we can’t get into great detail on funding for risk of getting into the realms of financial advice – it’s certainly worth seeking the advice of a great broker, and one that understands the SA (Serviced Accommodation) and Holiday Let strategy themselves.
If you’re looking for further guidance on anything within this article then please get in touch with us at info@hostnorthyorkshire.com.