Does potential rent from existing houses count as income for an application?

andyward82

I have a house with a mortgage. My girlfriend has a house with a mortgage. If we live together at my house. She rents her house out for £50 more per month than her mortgage is. If I put my house up for rent it would make a little more with rent than what my mortgage is. We would like to buy our own house together sometime.

What we'd like to do is keep our houses (as the prices are quite low at the moment) but also go for another house together - again because the prices have fallen quite low. How do we stand on this?

We don't earn loads and loads of money but I was thinking that perhaps because the houses we already own would be 'paid for' by rent then it'd almost be like having a clean slate financially (like we didn't have homes already)...

I guess what I'm asking is: Is rent taken into account and are there any legal / technical things I should know if we're getting another (joint) mortgage seeing as it'll be our second mortgage each...?

silvercar

Provided the rental income well covers the mortgage payments then most lenders should ignore the outgoings on the other properties. You are running a letting business, so providing it isn't a financial drain then you should be OK.

If you bought these properties on residential mortgages then the new lender will want to know that you have consent to let from the current lender(s) or have switched to BTL mortgages.

For your own peace of mind you need to ensure that you have enough money to cover the mortgages (with any increase in rates that may hit you) and to maintain the properties and comply with landlord legislation like the cost of insurance and gas certificates, letting agents etc.

Mrs_Bumble

I would suggest that they are more likely to take the income into account if you are declaring it as self employed income.

If you are only new to this then they are less likely to as you would be classed as new landlords.

Different lenders have different criteria about this and you would be best to speak to an independent adviser for some info before you commit yourself .

It is also essential to realise as well although in theory the rent will cover the mortgage if you don't have a tenant or they stop paying then you do need to have sufficient funds to cover the mortgage payments.