| Loan amount | £1,700,000 |
| Purchase price | £2,300,000 |
| Loan-to-value | 74% |
| Property type | Cotswold stone holiday cottage |
| Location | Bourton-on-the-Water, Cotswolds (GL54) |
| Term | 25 years interest-only |
| Rate | 5-year fixed |
| Lender type | Specialist holiday let lender |
| Income basis | Furnished Holiday Let income projection |
The Story
Cotswold Holiday Let Mortgage
Mr. Spottiswood sought to purchase a second home in the picturesque Cotswold’s, desiring a property that could serve as a personal retreat as well as a lucrative investment opportunity through short-term rentals such as Airbnb.
The Challenge
The primary challenge faced by Mr. Spottiswood was obtaining mortgage approval that not only allowed for personal use but also supported the flexibility needed for short-term lets. He also wanted to have part of the loan fixed and part of the loan on a floating rate.
The Solution
After evaluating the various options available, we identified a private bank lender that was particularly well-suited to meet Mr. Spottiswood’s requirements. This lender offered a flexible mortgage solution, lending up to 75% of the property value. The structure of the mortgage was especially favorable, allowing Mr. Spottiswood to have part of the loan on a five-year fixed rate, while the remainder was on a floating rate with no early repayment charges.
This flexible approach was crucial for our client as he anticipated receiving funds from the sale of shares and wished to repay the mortgage partially without incurring penalties.
Ultimately, Mr. Spottiswood successfully purchased his desired property in the Cotswold’s, having received a specialist mortgage that aligned with his plans for both personal enjoyment and rental income. The collaboration with Fox Davidson enable our client to purchase the beautiful property which would give his family some quality downtime but also provide him with a very attractive yield.
The property is now listed on Airbnb and is successfully let!
Through a focused approach and deep understanding of the market, Fox Davidson successfully delivered a solution that met and exceeded Mr. Spottiswood expectations. To be able to blend the rates and give the client a mortgage that allowed both personal and business use was perfect.
Fox Davidson work with International clients and UK resident clients to secure funding on property in the UK. We work by phone, email and video. We also have offices in Bristol & London.
Frequently asked questions
How is rental income assessed for a buy-to-let mortgage?
Lenders use the Interest Coverage Ratio (ICR), typically requiring rental income of 125 to 145 percent of mortgage interest at a stress rate. Higher-rate taxpayers in personal name usually work to 145 percent ICR; basic-rate taxpayers and limited company applications usually work to 125 percent.
What deposit do I need for a buy-to-let mortgage?
Standard buy-to-let mortgages require a minimum 25 percent deposit (75 percent LTV). Some specialist lenders go to 80 percent LTV. HMO and MUFB products typically cap at 75 percent LTV.
Should I buy through a limited company or personal name?
For higher-rate taxpayers building a portfolio, a limited company structure is usually more tax-efficient because mortgage interest is fully deductible against profit at corporation tax rates. Setup and accounting costs are higher, so the benefit is clearest from £200,000+ of gross BTL income.
How long does a buy-to-let mortgage take to complete?
A complete buy-to-let mortgage application typically takes four to seven weeks from application to drawdown. Limited company and portfolio cases sometimes take longer where the wider portfolio needs underwriting.
Completed transaction. This case study describes a live deal arranged by Fox Davidson. Client details are anonymised and figures rounded.
All rates and terms are indicative and subject to individual assessment, lender criteria and property valuation. Your home may be repossessed if you do not keep up repayments on a mortgage.
Buy-to-let, HMO, MUFB, and serviced accommodation finance. Specialist landlord broker.