The Client
Our client was a UK citizen who already owned one holiday let property, as well as his own residential home, and was about to complete on a second holiday let property. He worked as a train driver, on a good income combining basic pay and overtime.
The client had bridging finance in place against his own residential property, which he had used to buy his first holiday let some months earlier. He now wanted to pay off the more expensive bridging finance, known as exiting the bridge, with a remortgage on his residential home, while also securing a new holiday let mortgage for the second purchase.
The Scenario
The client had sufficient equity in his residential property to remortgage and release enough to cover the deposit on the new holiday let. However, before approaching us, he had spent several months trying to secure the funding through other brokers, without success. He had a high debt-to-income ratio, which was most likely the reason he had been struggling, since he needed the equity from his residential property to act as the deposit for the new purchase.
The Solution
As a whole-of-market holiday let broker, we know that some lenders’ internal credit scoring systems will still consider an application even where a client is highly geared, meaning a high debt-to-income ratio. So long as the credit score passes and existing credit agreements have been maintained to a satisfactory level, certain lenders will still proceed. In this case, we were able to use a high street lender who accepted the client’s residential remortgage.
For the holiday let purchase itself, since the client already owned one and had a good income, we secured him the best deal on the market that fitted the lender’s criteria perfectly. It also helped that the onward purchase was already resolved, since an unresolved onward purchase can often hold up a residential remortgage, as lenders want the specific details confirmed before proceeding.
Summary
Remortgaging a client’s own residential home can often be difficult where the client owns multiple properties and has a high debt-to-income ratio. Options do exist, however, especially where all existing credit agreements have been well maintained.
Frequently Asked Questions
Can I remortgage my home if I already own multiple properties?
Yes, though a high debt-to-income ratio can make it more difficult with some lenders.
Lenders assess the full picture, including your existing credit agreements and payment history, not just the number of properties you own.
Does having an onward purchase already agreed help a remortgage application?
Yes, having the onward purchase resolved can help a residential remortgage move more smoothly.
Lenders often want confirmation of the specific details of an onward purchase, and an unresolved one can hold up the application.
Can I get a holiday let mortgage if I already own one holiday let?
Yes, already owning a holiday let and earning a good income puts you in a strong position with lenders for a second one.
Lenders view an existing, well-managed holiday let as evidence you understand the product and can manage the additional commitment.
What is exiting a bridge?
It refers to repaying a bridging loan, usually through a sale or a remortgage onto a standard mortgage.
Bridging finance is more expensive than standard lending, so exiting onto a lower-cost mortgage as soon as a suitable one can be arranged is usually the goal.
Commercial Finance Network is a whole-of-market FCA authorised commercial finance broker working with property investors, developers, and businesses across the UK and internationally. We work across the full specialist holiday let panel and will tell you which lenders will engage with your deal, what LTV and rate to expect, and how to structure the application before anything is submitted.
Commercial Finance Network is directly authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage. Holiday let and business-purpose lending secured against investment property is not regulated by the Financial Conduct Authority.
Call us on +44 1494 622 111 or email info@cfnuk.com to speak to a specialist directly.
Related Pages
- Serviced Accommodation Finance – flexible mortgage solutions for short-term let and Airbnb-style property
- Bridging Loans – fast, flexible funding secured against property
- Buy-to-Let Mortgages – whole-of-market advice for landlords across the UK
- Bridging Loan Calculator – estimate monthly interest and total borrowing costs