The Scenario
In this case study, we look at how we helped a family relocating to Devon secure the right mortgage for a unique property, a five-bedroom main house on a plot that also included four separate holiday barns.
Their plan was to live in the main home and let out the holiday barns on Airbnb, expecting around £80,000 a year in rental income.
The property was valued at £1.1 million. They didn’t want a commercial mortgage, as this would come with higher interest rates and a more complex setup.
Their aim was to secure a residential mortgage, allowing them to live in the home and generate income from the holiday lets.
The Challenge
The biggest hurdle was the structure of the property itself. With five separate dwellings all under a single title, most mainstream lenders would classify this as a commercial setup. The fact that four of the buildings were intended for short-term letting further reinforced this view.
Most lenders are cautious when multiple self-contained units sit on one title, particularly when the primary residence is combined with income-generating elements. Keeping the mortgage residential, as the clients wished, would require a lender willing to take a more flexible view of the property’s use and structure.
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The Process
We approached this case by focusing on the client’s strong earned income, which was enough to support the full mortgage amount even without considering the rental income from the holiday barns. This opened the door to more tailored conversations with lenders.
We engaged a specialist lender, Handelsbanken, known for taking a pragmatic and case-by-case approach. We clearly outlined the clients’ intention to live in the main house and rent out the holiday barns as a secondary income source.
Because the clients both worked from home and could show reliable earnings, the lender was comfortable with the distance of their relocation , a three-hour move from their previous location. The key was being able to demonstrate financial stability and a practical living arrangement.
The Solution
The lender offered a 30-year repayment mortgage on a residential basis. This was exactly what the clients were hoping for, allowing them to avoid commercial terms and benefit from lower residential interest rates.
By treating the property as a main residence, the clients were able to move in, settle their family, and begin generating holiday let income without the complications of a commercial mortgage.
The Outcome
The residential mortgage gave the clients the flexibility and affordability they needed. The Airbnb rental income from the four holiday barns now comfortably covers the mortgage payments, leaving them with additional income that they can use towards future financial goals, including retirement planning.
They are now settled in their dream home, enjoying the lifestyle change they had hoped for, with the added bonus of a sustainable income stream.
Final Thoughts
This case highlights how a strong income, a clear plan, and the right lender can overcome the hurdles of complex property types. If you’re planning a move and hoping to generate income from your new home, even if it involves multiple dwellings or holiday lets, we’re here to help.
Get in touch to discuss your plans and we’ll look for the right solution to fit your goals.
