Considering a Serviced Accommodation Mortgage?
Serviced Accommodation Mortgages
There are several factors that impact securing both the most competitive interest rate and terms that lenders offer on serviced accommodation mortgages. There are some excellent headline rates from prospective lenders based on their lending criteria, some of the things that need to be considered when determining the choice of lender are:
- Lenders will only consider the rental income that would be anticipated if the property was rented out on an Assured Short-Term Tenancy Agreement basis, a typical buy to let scenario, and not the potential income that could be gained through serviced accommodation.
- The location is important, several lenders will not lend in some towns/cities and countries of the United Kingdom.
- The amount requiring finance will have a bearing on the choice of lender. For example, several lenders will not lend under £100,000 or £150,000. There are lenders who will lend less.
- The amount of deposit available. Lenders will expect the applicant to be able to put a deposit of a minimum of 20%. Many will require a higher deposit and if the property is new, this may from some lenders require a minimum of a 45% deposit against the purchase price.
- The size of the property. Generally speaking, lenders may not consider anything under 30m2.
Another factor to consider is the impact that the Covid-19 pandemic has had on the holiday let and serviced accommodation / Airbnb sector with many properties closed due to lockdown restrictions. Several lenders will not only look at the income generated from rental income for loan serviceability but also take greater reliance on other income to demonstrate affordability due to these restrictions.
There are some excellent headline rates around, without knowing the property details and circumstances unfortunately we’re unable to provide indicative rates and terms for you from a potential lender’s underwriting teams and trust that this information will be helpful to you when considering a broker with which to work with when looking to source a serviced accommodation mortgage.