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mortgage for house to live in but let 3 rooms?
want2bmortgage3
Posts: 1,966 Forumite
Hi all,
Considering buying a bigger house and renting out 2/3 bedrooms to lodgers (people I know).
I need to find out what I could borrow, to find out what my price range could be.
I will have a deposit around £50k, a rental income from 3 rooms of £975. However, my own income from job is only £22k.
How would this work? I can see two options, but I am no expert:
1. a residential mortgage 5x income giving me £110k loan and property up to £160k.
2. buy to let mortgage based on rental income, potentially borrow 4 times my deposit, so borrow £200k allowing me to buy up to £250k.
However, I'm not sure I am allowed a buy to let if I don't already have a residential mortgage? If anyone can shed some light that would be great!
Considering buying a bigger house and renting out 2/3 bedrooms to lodgers (people I know).
I need to find out what I could borrow, to find out what my price range could be.
I will have a deposit around £50k, a rental income from 3 rooms of £975. However, my own income from job is only £22k.
How would this work? I can see two options, but I am no expert:
1. a residential mortgage 5x income giving me £110k loan and property up to £160k.
2. buy to let mortgage based on rental income, potentially borrow 4 times my deposit, so borrow £200k allowing me to buy up to £250k.
However, I'm not sure I am allowed a buy to let if I don't already have a residential mortgage? If anyone can shed some light that would be great!
0
Comments
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You'll need to use a residential product if you plan to live in the property and only your earned income will be taken into account. Five times is the maximum, but don't forget to deduct credit commitments, childcare costs and maintenance before you multiply. A shorter term may also see your maximum reduced.
You can't use a BTL product on a property you intend to occupy yourself.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
I may be wrong but I think that many unrelated occupiers would make your house a HMO even though you are living there.
There may well be additional regulations for you to comply with e.g. fire doors.
Best to check this aspect out too, before you get too far down the track.0 -
Do bear in mind you'll need to pay tax on the rental income where it exceeds £4,250 - see https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme
And here are the HMO rules for my borough: http://www.rbkc.gov.uk/housing/environmentalhealth/homesinmultipleoccupancy/ismypropertyanhmo.aspx
Presume it's a national deal of max 2 lodgers before it becomes a HMO.
You'll need specialist insurance and you'll need to declare it to your lender - not all are keen
This website is a good source of info for some of the regs you'll need to consider http://www.spareroom.co.uk/So many glitches, so little time...0
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