We recently attended a Handelsbanken breakfast seminar to learn more about identifying cases they can assist with, especially those outside the normal sourcing systems. I gained valuable insights during the meeting, and I would strongly suggest that any brokers out there attend one of their sessions if another opportunity arises.

During the seminar, I came across a new phrase: ‘Hunting Pot’, particularly in the context of Buy to Let (BTL) properties.

You might be wondering, what is a Hunting Pot and how does it relate to BTLs?

A Hunting Pot is essentially a reserve of funds that can be accessed to purchase a property at short notice, enabling you to make a cash purchase. Being a cash buyer can offer distinct advantages in the property market. Sellers often prefer cash buyers as it allows for a quicker and more reliable sale, free from the delays associated with securing a mortgage. This can strengthen your negotiating position, potentially leading to a better price or giving you an edge in securing properties in competitive, high-demand areas.

Moreover, the flexibility of having a Hunting Pot allows you to pursue properties that may be unconventional or require some work. These properties might not meet typical lender criteria, especially if they are in need of significant renovation or fail a traditional mortgage valuation. Since mortgage lenders often have stringent requirements, properties that don’t meet these standards can be difficult to finance conventionally. However, with a Hunting Pot, you can purchase these properties outright, renovate them, and later decide whether to keep them as a BTL investment or flip them for a profit.

Mortgage Products to Create a Hunting Pot

To create a Hunting Pot, certain mortgage products can be extremely useful, particularly offset mortgages. These products allow you to use your savings or current account balances to reduce the interest charged on your mortgage, and they offer flexibility to access funds when needed for property purchases. The two main types of products are:

Standard Offset Mortgage with a Linked Savings Account

  • This type of offset mortgage allows you to link a savings account to your mortgage. The balance in your savings account is deducted from your mortgage balance, meaning you only pay interest on the net amount. The money in the savings account remains accessible, so when a property investment opportunity arises, you can quickly draw upon these funds to form your Hunting Pot.
  • This type of product is ideal for investors who want to reduce interest costs while having funds available to purchase properties quickly.

Offset Mortgage with a Current Account and Drawdown Function

  • Another useful product is an offset mortgage with a current account that includes a drawdown function. In this arrangement, your mortgage is offset by the balance in a current account, and you have the added benefit of a drawdown facility, allowing you to withdraw funds when needed. This offers even greater flexibility, as the money in your current account can be accessed immediately, making it easier to purchase properties swiftly without the need for a separate loan or bridging finance.
  • This type of mortgage is particularly suited to active investors who need regular access to funds, as the drawdown function provides immediate liquidity for investment opportunities, effectively creating a revolving pot of money for property purchases.

Both of these mortgage options allow you to maintain flexibility in your finances, giving you the ability to act quickly in the property market and make the most of opportunities as they arise. Having a Hunting Pot through these products can be a game-changer for buy-to-let investors, especially those looking to acquire properties that might not be easily financed through traditional mortgage channels.

**Your home may be repossessed if you do not keep up repayments on your mortgage**

**‘Not all Buy to Let Mortgages are regulated by The Financial Conduct Authority**