NatWest ended up refusing me. Not sure what the real reason was as they gave me conflicting answers when I asked. I think it just boiled down to them not wanting to lend.

Next I tried the Bank of China mortgage option. This would have been good, it was only after I had applied that they told me they don’t do interest only. So another dead end.

After another few hours searching I found that the Post Office mortgage offering looked attractive. The information on their website is quite exceptional. All the criteria is laid out so you can asses your chances before applying. The Post office mortgages are arranged through Bank of Ireland, another source I had investigated. The only problem was an exclusion for re-mortgaging within 12 months of purchase.

The 12 months are now up so I’ll need to do another search to see if the market has opened up with any better deals. If I can’t find a better deal then I’ll be going with the Post Office.

I like to work on figures so I’ve created a spreadsheet to model the business. The spreadsheet puts together the income and costs, then makes a simple comparison against alternative investments. What it doesn’t do, is to factor in the desirability of owning and using the property. I also need to consider the time and effort that would have to be put in.

If you are looking at this sort of investment, you might what to download the spreadsheet and plug your own figures in.

Furnished holiday let viability calculator

Brief explanation of the spreadsheet

Enter your figures in the blue cells

Purchase price /deposit, used further down to factor in mortgage payments and other potential investments.

Fees and set up, add on purchase costs and 1 off set up costs

Price per week, check out the competition and set likely prices

Occupied, enter f for a full week, 1 for a 3 day short break and 2 for two short breaks in 1 week. The part week rate gives the price for these.

The graph shows the income per week. The sample figures I’ve used indicate a property that is either unpopular or under marketed.

Variable costs Booking related, Agents fee, cleaning per occupancy,gas/electric per year estimate if fully occupied.

Fixed costs, unavoidable overheads per year

The results of this section are in the Basic Balance Box.

Having the figures in this format allows a quick assment various scenarios. What if we can increase prices? What if we market it better to increase occupancy? etc.

The rest of the sheet is me playing about with considerations for me to throw in to the mix. Answering questions like.

1. What if I just kept the money in a high interest account.
2. Whats the growth on the property value
3. How does it compare against two residential property lets
4. Whats the cash flow implications taking in to account tax and tax credits.

If you get this far down on the sheet let me know and explain it some more.

We’ve not come to any decisions yet but at least with this we can back up our thoughts with some hard figures.

Little competition in the market has lead to the lenders devising even more devious way of disguising how expensive they are. It’s taken me plenty of head scratching to work out the best deal for me.

I started with the normal comparison site searches then delved deeper into the details of the better looking offers. I also tried the more specialists sites and a broker. 

All the info I fed in to a spreadsheet so I could quickly asses and compare the products using my own criteria. The spreadsheet takes into account.

• Initial Rate
• Initial Rate period
• Follow on rate
• Arrangement fees
• Valuation fees
• Other fees eg. broker
• Loan interest to rental income criteria

I could develop the spread sheet further but if you want to try it out for yourself, here it is-

Buy To Let Mortgage Comparator Spreadsheet   

I enter the necessaries in the green cells and the results are given as running and averaged totals over 1,2,3,4 & 5 years. I’ve based my decision on these figures. 

It doesn’t give the monthly payment as it a pointless figure for a comparison.

I’ve left some figures in the download so you can see how it works. The interest to rental part was really useful to set the loan to value for the Natwest criteria.

Have a play and let me know what you think.

I’ve ended up going for the Natwest option, It helps that I’m an existing customer and get free valuation and legal costs. The Bank of China option looks really interesting if you can get to one of their branches to apply directly. I’d like to hear of any experience you might have.

Good luck with your search.