Last month we received an enquiry form direct from our website requesting a call back to discuss a mortgage for purchase of a Holiday Let property. As is usual, the discussion opened with the property and its location first.
Peter told us that the house had 6 beds, was of traditional construction, with a heated indoor pool and was currently in owner occupation. He went on to say that it was in an ideal location for holiday letting, being 5 miles from Salcombe, in South Devon.
So far so good…..
The discussion then went on to the price, which was £1.5 million, with a £900K deposit derived from the sale of another property asset a couple of years earlier. Our holiday let mortgage specialist, was impressed by the overall deal, as far as numbers and security were concerned. In addition, through careful questioning, our specialist had found out that some five years to six years earlier, Peter had sold on a rather substantial UK residential property portfolio and had all of the legal paperwork to substantiate this at hand.
Questions on personal income, assets and liability, soon followed. At this point, our mortgage specialist discovered that the potential client was a British Ex Pat, with no income chargeable to UK Tax. Peter was living in Switzerland, paid £250k p.a in Swiss Francs, but with no UK property assets. Peter had sold up lock stock and barrel in the UK and had no intention of returning any time soon. Peter’s expatriate situation gave our Holiday Let Specialist a moment of pause.
Now, all of our mortgage brokers know, from experience, that a holiday let mortgage lending solution to this case does not lie within the “off the shelf”, standard products offered by mortgage lenders.
Peter’s ex-pat situation, no UK property assets, no UK taxable income, combined with the fact that the employer was not a multi national, put this case beyond a standard package product.
Our adviser knew that the case needed a bespoke lending solution and, as such, needed to be put forward to one of the lenders with whom Enhanced Wealth Ltd has developed a long term relationship. These smaller lenders frequently allow cases for Enhanced Wealth that would not be granted either to other brokers or to direct applicants.
Peter was made aware that this kind of lending is very specialized and that consequently such loans are made at a slightly higher margin, based on the fact that lenders cannot obtain as much information, in terms of credit reference, as they can with a UK based customer. Peter was told that this case needed some careful research and discussion, however, a solution could be found, assisted by the fact that the security was excellent, deposit substantial and the business plan well above average.
We told Peter that, in a case like this, the determining factor was often the customer’s CV. Lenders, particularly in ex pat cases, need to have real confidence in the applicant’s ability to manage the Holiday Let remotely and our adviser thought that the quality of Peter’s CV would give that reassurance. We explained that his previous ownership of a Buy to Let property portfolio was a positive thing in the mind of any mortgage lending underwriter, and would only make any good case better.
Our adviser put together a discovery pack for Peter to complete, which included an assets and liability statement, income/expenditure statement, requests for the CV and three month’s banks statements, showing a mandated salary. This was sent by e mail, together with the ID requirements. In this case, Peter was asked to attend the British Embassy to have his ID certified, and to send this original copy to us via recorded delivery or specialist courier, like DHL. In some cases an original copy certified by a local attorney can suffice, but for speed we went for the Embassy. It took Peter a few days to get the information together and send it back. It was, however, well worth the effort, as it allowed Enhanced Wealth Ltd to approach the lender correctly and professionally, creating the right impression for the potential customer from outset.
We know that, particularly with ex-pat cases, lender perception is critical for a positive outcome.
After a few days involving liaising between underwriter and customer, we obtained a Decision in Principle. As expected, a slight premium was charged for the ex-pat situation; however, it was within Peter’s expectations.