Financing a Mixed Country Estate
Estate finance can be complex due to the nature of the security. The estate can include substantial acreage, rental property, a main residence, staff accommodation, commercial buildings, B&B’s, holiday lets and more. This mixed use of the property can cause most highstreet lenders a headache and obtaining finance against this type of asset can lead to mixed advice. Often brokers will advise clients to start splitting the title of the property. This is so they can place certain type of finance against different uses. We believe this should be a last resort and we are working closely with lenders to look at mixed use mortgages which allow you to keep everything on the same title.
We can separate the types of finance involved on an estate as follows:
- Residential – this is a property which you or your family members will live in. This type of finance is fully regulated by the FCA which means lenders need to adhere to strict legislation regarding affordability for the mortgage.
- Buy To Let – this is finance secured on a property which is let on a long term basis. This finance is not regulated by the FCA so whilst lenders do not need to have such strict personal affordability criteria they do need to base their lending decision against the rental income from the property.
- Holiday Let – this is finance secured on property which is let on a short term holiday basis. Again this is not regulated by the FCA and the affordability is based on an estimate of the average income the property can generate in a year.
- Commercial finance – this is finance secured against business premises. This may be a farm shop, farm, livery, offices or any commercial premises which are run by the estate or leased to tenants. This is not regulated by the FCA and affordability will be based on the lease in place or via the accounts if the business is being self operated.
Lenders have historically found it quite difficult to mix these types of finance because they are assessed in different ways and if the main residence is also included this brings FCA regulation into play which can mean tougher criteria regarding affordability.
We at Fox Davidson have however been working closely with lenders to develop mixed use product which can allow some or all of these elements to be secured against on the same title. As a whole of market broker we work with all types of lender to find the most cost effective solution. This includes highstreet lenders, commercial funders, bespoke local lenders and private banks.
Borrowing can be arranged as full repayment, interest only or a mixture of the two. If a landed estate, the property will be generating income to support it’s self. This can be used towards affordability for the finance and accounts for the estate will be requested. Personal earned income can also be used towards affordability. We can take into account income earned outside the estate along with anything generated from within.
If you would like to review your estate finance please call or email our team on 0117 989 7950 email@example.com. Our advisers will have a confidential initial chat over the phone and provide you with some initial ideas based on your information.
Our adviser can then come to meet with you at the estate to run through everything in more detail and provide you with a full recommendation.
What are your fees?
We are paid a commission by most lenders which allows us to keep our fees to you as low as possible. Depending on the nature of the finance, we charge from £495 to 1%. The initial advice is at our own cost and we will confirm all fees after our initial call.