Case Study – Buying a Second Home
Our Clients’ Situation
Long standing clients of ours had always wanted to own a property in the Shetlands and eventually after many years of looking finally found a property that matched their requirements and was within their budget of £78,000.
As they already owned a property in the UK with an outstanding mortgage, which was their main residential home, they needed to secure a second mortgage for the purchase of the dream property.
You may think this is a straightforward case of just arranging another mortgage – it wasn’t!
Firstly, not many lenders lend for second properties or holiday homes – Buy to Lets are a different thing altogether. Secondly, the location of the property in the Shetlands reduces the number of available lenders, and thirdly the mortgage has to meet the lender’s affordability criteria. Finally you will need a larger deposit.
In addition to all the points noted above the property was also constructed of Rendered Block. To many lenders this would be counted as non-standard construction and as such a mortgage would not have been offered.
Many lenders will reduce the mortgage available on a second home / holiday home but we were able to recommend a lender that only required a 15% deposit, would lend on a property in the Shetlands and also accept that the property was made with Rendered Block.
By taking the clients’ joint incomes and deducting their monthly residential mortgage as a commitment along with other loans they had outstanding we were able to meet the lender’s affordability requirements.
The mortgage application itself was relatively straightforward with the lenders only requiring sight of their latest payslips and a valuation report on the proposed property.
As the property was in the Shetlands the purchase came under Scottish Law and the clients therefore used a solicitor in Scotland.
In line with English Law, Scotland after 1 April 2016 now charges the equivalent of Stamp Duty of 3% on purchases up to £125,000 on any property that is not your main residence (see our Stamp Duty information).
Once the lender had received a satisfactory valuation report and sight of the payslips a mortgage offer was produced.
After going through the legal process and completing the purchase our clients are now the proud owners of their dream home in the Shetlands.
Who says dreams do not come true – speak to us and make it happen !
Manchester Mortgages is a trading name of Mortgages 4U (North West ) Limited which is authorised and regulated by the Financial Conduct Authority (FCA register number 301076). Registered in England & Wales No. 4729252. Registered office: 7 Randale Drive, Bury, BL9 8HZ.
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