Joint mortgage: one person living there, one renting out?

quagmire2

Hi - I'm getting conflicting advice and would really appreciate any help you can give. My sister and I want to buy a 2-bedroom property together in London but with an arrangement whereby she lives in it and I don't [complex back story - can explain if relevant] and we rent out the other room to a lodger. A mortgage broker we have approached says this is impossible on a residential mortgage and that the only option would be for me (alone) to get a BTL mortgage and rent out to my sister and nobody else (which entirely defeats the purpose which is for us both to own and to cover my part of the mortgage repayment through renting out to a third person). Halifax, on the other hand, have assured us that this arrangement is absolutely fine and can be done on a residential mortgage. The mortgage broker has since approached Halifax and been told that on no circumstances would they permit us (a) not to live together or (b) to have a paying lodger.

All very confusing - any thoughts very gratefully received!

Thrugelmir

Are you intending to use the lodgers contribution to fund your share of the mortgage? i.e. without this the mortgage would be unaffordable.

quagmire2

Not my share of the deposit but it will certainly help with the mortgage repayments - is that what you mean? However, if absolutely necessary I could probably manage without and I think my bank statements etc. would (just!) about demonstrate this to a potential lender.

getmore4less

people do this a lot.
one thing to factor is the tax on the rental income.

you also need to consider how you cund your share of maintaining the place

also need exit plans

Senior_Paper_Monitor

The mortgage broker is wrong.

Nothing inherently wrong with the arrangement for the majority of lenders (need to select a lender who permits 'absent party') assuming your overall circumstances stack up (the 'complex back story' will probably be relevant to this).

Some lenders will require 'permission for lodger' and this should be done subsequently - so selecting an appropriate lender is relevant. No part of the lodger income will be considered for affordability purposes by any lender.

antrobus

getmore4less wrote: »

people do this a lot.
one thing to factor is the tax on the rental income.
...

The rent a room scheme might be of some help to the OP.

https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

quagmire2

Thank you v much for these comments - definitely sets my mind at rest and will help point me in the right direction when formally approaching a lender.