Mortgage experts!!! Subsidising GF's share with a lodger. Thanks

lightspeed

Hi

Further to my initial post a few days ago (http://forums.moneysavingexpert.com/showthread.html?t=338102)

I am still unsure about what the outcome of this situation will be, however, i am trying to get some information so that i am fully aware of what is available to me. As things stand, if my relationship with my GF is over i would like to keep our house myself if at all possible.

The main avenue that i would like to pursue is me buying her out (cash) and taking in a friend as a lodger. I would like to know if anyone has had any experience with taking on a lodger to subsidise, in the form of rent, part of a mortgage?

I have got an individual expressing a clear interest in lodging with me and their contribution would be equal to what my GF was providing.

With an income of 23Kpa, no mortgage company is going to allow me to take over a 140K mortgage (i dont blame them and i wouldnt want to without another source of income), however, if i am able to provide evidence that income from a lodger is a possibility, how will they view this? I could manage the mortgage and bills for the remainder of the fixed period (18 months) but would be living on a tight budget.

As previously stated, i have no other debt and my mother could potentially act as a guaranteur for me.

Basically, i would like to know whether what i intend to do is possible?

Thank you

regularsaver1

You would need to get the lender to agree to you taking on the mortgage - they may not take your mother as guarantor - this may depend on your job prospects and her commitments.
Does your mother have a mortgage herself or other credit commitments she is responsible for?

What is your job? Are you likely to get future payrises - ie from training

They may also not take income from lodger into consideration as not guaranteed.

Although the government encourage lodging under "Rent a Room" scheme where I think you can earn up to £2000 tax free from it, I will still say you are best informing lender of this incase you need their permission.

If your GF does not want the house anymore - it isn;t that simple. You would need to do a Transfer of Equity using a solicitor. It is going to cost her. I say her, because why should you pay. But either way - it can take a long time, and there is often a fee to the lender as well as the solicitor.

Good Luck

lightspeed

Hi

Yes unfortunatly my mother still owes 50K on her own mortgage however, this is going to be almost covered by her endownments and by the time the term is up (6 years), the shortfall would be paid by savings.

I am a teacher so can expect annual pay rises and there is always the potential for new opportunities. I am 25 and at the start of my career,so i would expect to see an improvement in my salary over the next few years - by how much reamins to be seen.

I realise that there are a lot of "what ifs?" and it is difficult to say anything for sure, i just wanted to know whether it might be possible.

Rick62

Its a difficult situation. I don't think they would be keen on your mother as guarantor, being close to retirement and having her own mortgage, and as you say no prime lender will want to lend you 6x salary.

I think you have a few options (apart from selling).

Come to an agreement for your girlfriend for her to stay on the mortgage for a couple of years until your salary supports a sole mortgage. (You need about £28-30k salary).

Find a friend to buy out her half of the property/mortgage.

Keep the property as a Buy to Let for now, with a BTL mortgage. Then, once your income has increased you could move in.

Troubleatmill_2

Rick62 wrote:

Come to an agreement for your girlfriend for her to stay on the mortgage for a couple of years until your salary supports a sole mortgage. (You need about £28-30k salary).

Find a friend to buy out her half of the property/mortgage.

Problem here is that the Girlfriend is probably wanting to get a new roof over her head and that means she will want a mortgage at some point soon.

Not what you are wanting to hear - but is the most likely outcome.

Best
Troubleatmill