We need £50,000 for a second bathroom but mention ‘holiday let’ and lenders just shy away
Q My wife and I jointly own a listed manor house with a number of outbuildings including a converted barn which is used as a holiday let. We own the house and all outbuildings plus about 10 acres of land.
We were intending to add a second en-suite bathroom in the holiday let and hoping to take out a mortgage for around £50,000 to pay for the development. We wanted to raise a mortgage against our home which is valued at £1.25m. We have lived in it for three years and are mortgage free. My wife is 53 and works full time and has an annual income of £40,000. I am 61 and retired, so look after the holiday let and all our gardens. Please can you advise as to what type of mortgage options would be available? We expected to be able to get a normal residential mortgage. The payment is not dependent on the holiday let income. As soon as we mention a holiday let all standard mortgage providers shy away. I cannot understand why. We have a 100% equity in our property and only require a small mortgage over, say, 15 years.
JK
A The reason that standard mortgage providers shy away from your pretty niche proposition is quite straightforward. According to independent mortgage advisor Luther Yeates of Clifton Private Finance, “banks and building societies aren’t really set up to look at your fairly complex set-up and then work out if they can offer a solution. They’re looking at the criteria for the loans they’ve got on offer, and ticking off if you match”. Yeates explains that high-street lenders can also find it challenging to consider other less standard areas such as ex-pat mortgages, funding for property renovation and home-owner builders, as well as people looking to borrow more than the usual 3.5 times their income.
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