What to tell Bank about Lodger when applying for mortgage.

carlos1973

I've got an appointment with my bank tomorrow to apply for a mortgage. The problem I have is what to say about someone who's going to rent a room from me.
My current flatmate is going to move in with me and I'll be charging him £175 a month plus half of the bills. I can afford the mortgage on my own and would be looking to either save the money he gives me, as a reserve in case things break etc, or make additional payments to the mortgage.
I'm looking at properties between £60k and £75k and have deposit of £30k.
My concern is how do I explain to the bank the situation.

Leon_W

Why say anything ?

McKneff

Im not an expert but just giving my slant on things.

If you are applying for a mortgage obviously you will be applying on your own income, whether you get it or you dont i dont see that it has anything to do with anyone including the bank whether yu have a lodger or not.
I wouldnt even bother mentioning it to be honest.

If they were going to be a tenant, now that would be a different thing altogether.

And good luck with your application.

getmore4less

It will almost certainly be a requirement that you tell them if/when you get a lodger, but untill you have bought the place there is no lodger.

So you ask what the policy is so you know what to do should you at some point get a lodger.

Senior_Paper_Monitor

Only a small (immediately I can think of one) number of lenders will count income from 'lodger' towards affordability.

All lenders will require their preferred format of 'deed of consent' for any resident adult not on the mortgage.

If not being used for affordability and 'deed of consent' signed as result of declaring the person resident then it is of minimal interest to anyone including the lender.

carlos1973

Thanks for the replies.
Senior Paper Monitor: What is 'Deed of Consent'?
At the moment we are co-tenants on a rental property but I've inherited £45k after the death of my mother.
I'm using this to clear my current debts (£5k), furnish and decorate (£8k), deposit (£30k) and I'm keeping the remainder as a emergency fund.

GMS

'Deed of Consent' is a waiver of rights to any interest in the property. Basically means that the person can not get in the way of a lender taking possession should it be necessary.

Standard for everybody over 17 residing in a property who is not party to the mortgage, including family members.

dimbo61

You are allowed under the governments "rent a room scheme" to rent out one room for upto £425 a month tax free
Please check on the government websites

Senior_Paper_Monitor

Dimbo, that is certainly relevant with regard to tax liability when you do so BUT frankly has no impact on the lender's attitude to its permissability nor whether it counts towards affordability.

dimbo61

Sorry SPM you are right but the poster does have a 40% deposit and thinks he can afford the mortgage on his own so the lodger is extra income tax free

carlos1973

I can afford everything on my own, I wouldn't apply if I couldn't - He might move out etc.
When giving my income expenditure details do I give £78 Council Tax, £45 Gas and Electric, £25 Insurance etc, or £55 Council tax, 22.50 Gas and Electric, £12.50 insurance etc.
I don't want to jepeordise my chances of getting a mortgage by giving wrong figures.