Do lenders class rental income as 'other income' on mortgage application?

PrincessJR

Hi,

My Husband and I are due to apply for a new mortgage after selling our home.

We have a 2nd property which we receive a rental income on of £700pcm (and have done for the past 2 years) and plan to keep.

We had never considered including this as part of our annual income but I've realised that actually it IS, as it's regular each month - is this correct to assume or would lenders not consider it 'other income'? The property we receive rental income from is mortgage free.

My Husband works F/T with a salary of £32k
I work part time with a pro rata salary of £8500
We jointly received £8400pa rental income

So would this count as a total income of £48,932k? or is it not that straight forward?

We have a deposit of £65k to put towards the new house so are hoping to borrow around £220k to finance a house costing £280k.

Any advice appreciated

Thrugelmir

Is the property free of encumbrance i.e. mortgage free?

HappyMJ

PrincessJR wrote: »

Hi,

My Husband and I are due to apply for a new mortgage after selling our home.

We have a 2nd property which we receive a rental income on of £700pcm (and have done for the past 2 years) and plan to keep.

We had never considered including this as part of our annual income but I've realised that actually it IS, as it's regular each month - is this correct to assume or would lenders not consider it 'other income'? The property we receive rental income from is mortgage free.

My Husband works F/T with a salary of £32k
I work part time with a pro rata salary of £8500
We jointly received £8400pa rental income

So would this count as a total income of £48,932k? or is it not that straight forward?

We have a deposit of £65k to put towards the new house so are hoping to borrow around £220k to finance a house costing £280k.

Any advice appreciated

I'd take out a BTL mortgage on the property and use the money to borrow less on the property you're going to live in.

You can borrow any amount of money on a BTL mortgage...the rent received has to be 125% of the interest charged..or more.

So you could borrow about £130,000 against that property. You would then easily be approved for a mortgage of just £25,000.

Pixie5740

I think it would profit from the BTL rather than just using the rental income.

amnblog

Some, but not all Lenders would consider this under other income.

PrincessJR

Thrugelmir wrote: »

Is the property free of encumbrance i.e. mortgage free?

Yes the property is mortgage free

PrincessJR

Thank you for your advice so far everyone.

We hadn't considered the BTL mortgage idea to be honest. I think i'm going to speak with the broker we used in 2009 for our first mortgage, to run the actual figures past him and take it from there.

Confusing business this house buying!