200K mortgage

[Deleted User]

My daughter is thinking of applying for a 200K mortgage. However, she will not be able to maintain the mortgage repayments on her salary alone, so she will be able to if she sub-lets one of the bedrooms.

Could anyone tell me if building societies consider the application favourably if she explains that she will be subletting to meet the repayments. I seem to remmeber that when I applied for my mortgage, one of the condtions was that I would not sublet. Is this still the case or have have they relaxed this rule.

Any comments gratefully acknowledged.

cattie

Mortgage lenders unfortunately don't approve of lodgers or subletting & it will be no help to your daughter in trying to get a mortgage of a higher amount than the lender feels she can afford.

When I was buying my last property, still through the same lender I'd had before & had a very low income & no job, I mentioned to the mortgage advisor that I was going to let a couple of rooms to students so my income would be more. He told me he didn't hear what I said & would make no reference to it in his recommendation to the mortgage panel as it certainly wouldn't help me.

When I got my morgage approval it was because my income was just within the 3 x income formula that they used & that I already had a clear history with them. It probably helped that I had a lot of equity too.

Your daughter would be better to look for a property in a price range that she knows she can afford on her income alone. She can always think about renting a room out once she takes up residence.

Hawksmuir

Sounds too risky to me, has she thought about what will happen if she can't get anyone to move in ?


Might sound harsh, but I would advise her to buy what she can afford on her own then think about lettign rooms out.

[Deleted User]

It may be risky, but she needs to buy in London because of her job. House prices are not cheap, and I don't think she can buy anything much for under 200K. As for not having any rental income, this may not be for long as in London, renting is very easy. When she was looking for property to rent, she soon realised that properties were being snapped up very quickly.

It's a great pity that building societies do not allow sub-letting - I had a feeling that may still be the case.

Thank you both for your replies.

bury_2

Hi,

Some mortgage companies have a product called rent a room. It basically means that you are buying the property and will be letting a room. I can't think what company it was, maybe a search on google would help or london and country.

Old_No.7

Hi there, I'm sure there are (or at least were) some mortgages deal out there where they include the option to rent out a room. Bradford&Bingley had a rent-a-room mortgage where you could add £4,000 to your income due to the rental income. This is an ancient link but explains it. http://www.findaproperty.co.uk/story.aspx?storyid=2761

herbiesjp

What kind of income is your daughter on?

sashacat

Don't relie on renting that easily in London..we have 2 properties there and have friends with others.....you may be lucky and get someone straight away but you could be waiting for 3 months or so. I an aware of the pitfalls as my own daughter was in this situation....in the end I stumped up the deposit and went( and still am a joint mortgagee). Also you will have a higher interest rate if you let a room...for us it is 1% extra. Be careful with the insurance as well as having a tenant can invalidate it...tell the insurer or they may not pay out if there is a claim. Don't even consider not telling the mortgage company as they found out about my daughter's friend and he started getting letters from their solicitors...which cost a lot of money for each letter....they threatened to forclose...he had to get rid of his tenant...good luck anyway, but there are flats in London for under £200k...but can't she buy with a friend which is what a lot of young people in London seem to do

zag2me

Yep it might be a good idea at looking at shared ownership, or buying with friends, its about the only way any young person can get on the ladder at the moment.

roswell

if she cant affprd the morgage for the property surely she will be better off still renting and saving a bigger deposit .... till she can get a morgage she can afford eg (3 X Salary) + deposit = £200 000 ????

[Deleted User]

roswell wrote:

if she cant affprd the morgage for the property surely she will be better off still renting and saving a bigger deposit .... till she can get a morgage she can afford eg (3 X Salary) + deposit = £200 000 ????

Your suggestion would not be a bad idea, but unfortunately, in this day and age, it is a bit like chasing her own tail. Tell me, how can she pay a rent of £800 pm and still be able to save for a deposit. Impossible.

I'm afraid property prices have gone up totally out of proportion with salaries. I really feel very sorry for today's younsters wanting to get on the property ladder. The odds are very much stacked up against them. When we were buying properties, at least we and indeed our parents, had a very good chance of getting a mortgage. God - I sound so old...

Thank you all for your replies which I read with great interest.