Background
A holiday let investor needed to raise £300k to repay existing debt and capital raise to repay the business the funds used to purchase the property, an unestablished holiday let in a rural Welsh location.
The client was an experienced BTL investor with three years of holiday lettings management experience from another asset in their portfolio.
Challenge
The AST income for the year came to just over £10,000, which would have allowed the borrower to borrow c£180,000 with a loan to value ratio of less than 40%.
The nature of the security needed to be taken into account. Holiday lets can often be remote and isolated properties that would subsequently command low rental incomes.
Solution
HTB took the time to review the immediate market forces and substitute units and found comfort in the client’s management ability and the trading potential of the proposed security. Demand and potential seasonal income indications were taken from local lettings agents who had deep experience in the market. An average figure was used that allowed a large enough exit facility to be put in place. This allowed the client to leverage their security sufficiently by taking into account a more realistic yield and exit the bridging finance to recover refurbishment costs spent.
The deal was completed in 12 weeks from enquiry to completion.
Outcome
HTB identified the property had the potential to generate a significantly greater income of £10,000 a year.
The team were able to obtain confirmation that the property could let out at a weekly rate of c£900. With this information, the team applied a prudent occupancy of 30 weeks which generated an annual income forecast of £27,000. This calculation more than allowed the borrower to get the requested loan amount of £300,000 with an LTV of 61.86%.