Commercial Mortgage Dilemma

highonthehog

We wish to buy a property as a home but we also wish to let a room or two (under 6 beds so not a full blown B&B) and maybe turn an out building into a holiday let. We have been advised that we would normally require a commercial mortgage but my partner's salary (she will continue to work) will cover the mortgage completely, we don't think we will get a commercial mortgage as we have only been back in the country for 18 months after returning from Austria, any way around this? We have been offered a residential mortgage but the rules of this type of mortgage will not allow us to let a room or run a holiday let. Would having a mobile home or wood cabin to let (non permanent) still be a problem? Any help greatly appreciated, thanks

holly_hobby

The terms of your residential mge will prohibit the operating of the prems as a business - which would emcompass parts of the property or outbuildings used as holiday lets, or the operation of the property as a hotel/guest house.

If you are looking at having lodgers, as oppossed to guests, you may want to have a read of the Gov Rent A Room scheme (pdf attached).

http://www.hmrc.gov.uk/helpsheets/hs223.pdf

If you do use the property under a residential mge, for commercial use, you are in breach of the terms of your mge t&cs, which may incur serious consequences of the lender (inc the invalidation of any resi blds ins you have).

Don't forget if operating as a guest house that you will require all permits, indemnity insurance, and bldg/safety sign off by the LA.

Hope this helps

Holly

highonthehog

Hi Holly

Thanks for your reply, I am aware of these things, what I need is a way around it, we have also been told we can not do the rent a room scheme on a non commercial mortgage, thanks

Jimbo1976

It looks like Market Harborough Building Society offer a holiday lets mortgage, am not sure how much they load the rates

http://www.mhbs.co.uk/holiday_let.aspx?gclid=CNO7sN330rICFdJvfAod4R4AzA

Also Cumberland Building Society

http://www.cumberland.co.uk/mortgages/buy-to-let/holiday-let

There also seems to be a broker which specialises in holiday lets, i have no idea how good they are.

http://www.holidayletmortgages.co.uk/

Not sure how the fact that you intend to live in the property would affect the CBS and MHBS schemes but it is probably worth talking to them and making sure you disclose this information up front

holly_hobby

highonthehog wrote: »

Hi Holly

Thanks for your reply, I am aware of these things, what I need is a way around it, we have also been told we can not do the rent a room scheme on a non commercial mortgage, thanks

There isn't one if you are running or using the property (or part of) as a business - as a resi mge won't fit.

H

Conrad

Well of course I can never condone rule breaking but I have to say in the real world many many folk quietly let a room, it's been happening forever. This includes people such as renownd University professors and GP's.

In theory you aren't supposed to talk n eat at the wheel, but everybody does it........ does that make em all crims and potential manslaughter's?

OP - you will only get a normal mortgage, and no lender will entertain lets but again in the real world people do take in forign students / friends etc all the time and often it's all cash and unseen.
My only worry would be if the place burned down and your insurance was made void were they to find out you were letting especially if the occupier was injured.........