Do holiday let mortgages allow for refurbishment?

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    If you’re hoping to secure a holiday let mortgage, there’s something important to consider; the property that you wish to purchase must be habitable and essentially lettable from day one. If your desired property requires a lot of work, lenders are highly likely to refuse your mortgage application.

    That being said, if you are looking to buy a property that’s just a little tired and run down, there’s no need to lose hope! Here at HCM, we can work with you, helping you to find the right lender, one who will allow a degree of light or cosmetic work, prior to letting.

    What do mortgage lenders not want to see?

    In addition to the mortgage applicant meeting specific criteria such as minimum income and a suitable rental profile, lenders will also want assurance that the property itself is fit for purpose. In other words, they will want to know that a holiday home is liveable and can be let out to paying guests quickly. The logic behind this is that if the applicant buys the property, but then fails to make their mortgage payments, the lender will face the daunting prospect of trying to sell a run-down property on the open market, which could be difficult.

    ‘High risk’ properties will raise serious warning flags and so watch out for properties which…

    • Require development or structural work.
    • Don’t have functioning utilities.
    • Don’t have a functioning bathroom or kitchen.
    • Have been left empty for a long period of time and suffer from severe damp, degradation, and so on.
    • Are typically sold at auction sites.
    • Have been lived in for decades, but never updated.

    Such properties will not be deemed by holiday let mortgage lenders as suitable security to allow for lending; should something go wrong and the property need to be repossessed, the lender will end up in a very difficult situation. In these situations, you would be better off considering other short-term finance solutions such as a Bridging Loan.

    As a side note, for more general advice about what not to buy when it comes to holiday lets, check out our dedicated article here.

    So, what sort of work might I be allowed to undertake?

    Drilling into wood

    If you are purchasing a property which only requires a small level of cosmetic improvement, most holiday let mortgage lenders will be more flexible. That being said, the lender will want to see that:

    • You have the free cash (such as savings that you can easily prove) required to complete the work.
    • You are able to complete the work within a certain time frame, usually within four to eight weeks.
    • While the property will benefit from minor improvements, it is still habitable from day one.
    • You’re able to prove that you can continue to make the mortgage payments, even if you have no rental income while the work is being done.

    How can HCM help you?

    Thanks to our expert understanding of lenders and our close working relationships with the people inside those organisations, we can help you to find one who will be flexible and allow you to secure a light refurbishment mortgage.

    When it comes to manually underwritten holiday let mortgages, unfortunately, nothing is ever straightforward! But, having the ability to engage in direct and meaningful conversations with the underwriters often makes the difference between success and failure.

    If you wish to purchase a holiday let in the need of a little TLC and are worried about making a successful mortgage application, contact us or create an account and request your free, initial assessment, here.

    Andy Soye Profile Photo

    Andy Soye

    Founder @ Holiday Cottage Mortgages
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      FCA disclaimer

      The information contained in this article is accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time and so please speak to one of our Consultants to confirm the most accurate up to date information. Nothing in this article constitutes financial advice. You understand that by clicking any external links on this page that you will be leaving the website of Holiday Cottage Mortgages and we cannot be held responsible for the content of this external website. Please always consult your accountant or solicitor for all financial, taxation or legal matters.