Would welcome your thoughts on my situation

TonicBristol

Hello

I've lurked here for some time and would be interested for your thoughts, feedback and advice on my situation.

I earn £27,500 a year (of which 3% is salary sacrificed for my pension and also have a student loan). My deposit is £15,000 and I'm debt free (but spend a couple of hundred pounds each month on a credit card).

The plan is to buy a 2 bed flat for £125,000 - £145,000 to live in and rent out the second bedroom for around £450 per month. Currently I pay £725 in rent (plus £250 in Council Tax, gas/electric bills, phone, internet, etc.) and am locked into a tenancy agreement until the end of the year. No late/missed payments on my credit file for nearly five years, but did have one default on a mobile phone bill in November 2009 which was satisfied in early 2010.

My questions are:

What are my chances of getting a mortgage?

If I'm intending on renting a room, can potential rental income count towards the mortgage application?

Many thanks

Alan_Cross

Wow, a single bedroom rented out in Bristol goes for £450/month? Must get myself into that market...

dimbo61

No lender will count the income from getting a lodger.
With £15,000 deposit you are looking at 10% deposit so 90% mortgages.
Four times you income might be possible. £108,000
If you pay more than £125,000 you also have stamp duty.
If you can get a two bed/ two bathroom place ( one En-Suite ) with both bedrooms doubles and similar size you should have little problem getting a lodger.

ACG

I think you should be looking more towards the lower end of your budget. Some lenders will ignore your pension payments, others will not so a good choice of lender may enable you to get more but to be honest i think £145k is probably going to be a little too much.

No lender will accept lodger income so its probably worth knocking that one on the head.

TonicBristol

Thanks for your replies Dimbo and ACG, it's really appreciated. They've given me food for thought

kingstreet

The student loan payments and ground rent & service charges will see what you can borrow reduced. In some cases, pension contributions will too.

You need to carefully plan affordability under the new MMR regime. An independent broker will help you work out the best lender for your needs/circumstances.

TonicBristol

Thanks Kingstreet. I hadn't considered the effect of the charges and ground rent.