Moving home/mortgage - income from room rental

drsquirrel

We're now looking at a new place, and its stretching the budget for what the calculators are saying we can borrow. Hopefully we get a low buy and high sell on our current then this shouldn't matter. Bonus/Overtime would cover it but would be hard to prove so I'm trying to plan without this.

We really want the place, and feel we can afford the monthly payments and even overpay as we've always done.

Since the place is a 4 bedroom house (technically 5 having 2 rooms on the 3rd floor with ensuite) my sister will move in with us and pay keep.

Can this be included as income when it comes to calculating the maximum we can borrow?

Our other thought was to include her on the mortgage, she is debt free and working full time etc. We realise there are risks and I have to go in with this on trust. What would be the cost/process later on to remove her from the title deeds once we've cleared some years (we plan min 18 years on a 25 year term).

dimbo61

Most if not all lenders will not include Lodger income and you could be opening a big can of worms if you put your sister on the mortgage ?
She may want to buy a place of her own 3% extra stamp duty and the need to get off your mortgage

AnotherJoe

drsquirrel wrote: »

We're now looking at a new place, and its stretching the budget for what the calculators are saying we can borrow. Hopefully we get a low buy and high sell on our current then this shouldn't matter. Bonus/Overtime would cover it but would be hard to prove so I'm trying to plan without this.

We really want the place, and feel we can afford the monthly payments and even overpay as we've always done.

Since the place is a 4 bedroom house (technically 5 having 2 rooms on the 3rd floor with ensuite) my sister will move in with us and pay keep.

Can this be included as income when it comes to calculating the maximum we can borrow?

Our other thought was to include her on the mortgage, she is debt free and working full time etc. We realise there are risks and I have to go in with this on trust. What would be the cost/process later on to remove her from the title deeds once we've cleared some years (we plan min 18 years on a 25 year term).

Speak to a broker, the calculators may be very misleading, especially if you are borderline.

Putting your sister on the mortgage is risky. May work out OK, could be a catastrophe. Main issue is, what if she decides she needs to sell her portion for any of numerous possible reasons? Could leave you being forced to move house.

So, see a broker and find out how realistic this house is.

drsquirrel

dimbo61 wrote: »

Most if not all lenders will not include Lodger income and you could be opening a big can of worms if you put your sister on the mortgage ?
She may want to buy a place of her own 3% extra stamp duty and the need to get off your mortgage

I never considered the second home stamp duty increase, its unlikely that she will own for a good long time to be honest. If she did win the lottery to get enough for a deposit on the place, I wouldn't not cover her extra stamp duty for her anyway. And the plans would be to have her off the mortgage down the line. I realise its a "can of worms" though.

Nationwide (current provider) seem pretty clear that they wont accept lodger income.

AnotherJoe wrote: »

Speak to a broker, the calculators may be very misleading, especially if you are borderline.

Putting your sister on the mortgage is risky. May work out OK, could be a catastrophe. Main issue is, what if she decides she needs to sell her portion for any of numerous possible reasons? Could leave you being forced to move house.

So, see a broker and find out how realistic this house is.

I spoke to a broker before I had considered this, its only really border line if we sell low and cannot barter the price down. I'm probably worrying more than I need to really considering Bonus and OT can work towards it, just depends how things all mesh together at the time. They didn't seem to concerned.

I know adding relatives/friends onto a mortgage can be risky, and have considered that, and in all faith have trust that this would work. The intention would be for no equity to be taken by her once she is removed from the deeds, even if she could try to take it etc.

It was just another thought, ideally don't want to and the lodger income was my main focus.

Dird

Live within your means. Can you afford that amount of mortgage at 7% interest and your sister moving out to live with a bf? Do you have 3-4 children?

Forget about stamp duty, you're potentially screwing her out of 25% HTB bonus when she comes to buy her own

drsquirrel

Dird wrote: »

Live within your means. Can you afford that amount of mortgage at 7% interest and your sister moving out to live with a bf? Do you have 3-4 children?

Forget about stamp duty, you're potentially screwing her out of 25% HTB bonus when she comes to buy her own

We do easily, yes we could, and no we don't.

I did forget about her HTB, whilst its unlikely this would happen, it is unfair, this is why we ask questions like this in the open, thanks (not even the broker mentioned that).

Pixie5740

To be clear you want to have a mortgage with your sister for which she will have joint and several liability and be contributing towards but when she eventually moves out will not receive any of the equity?

AnotherJoe

drsquirrel wrote: »

I spoke to a broker before I had considered this, why then are you using mortage calculator websites which are very generic? its only really border line if we sell low and cannot barter the price down. I'm probably worrying more than I need to really considering Bonus and OT can work towards it, just depends how things all mesh together at the time. They didn't seem to concerned.

So it is borderline then?

I know adding relatives/friends onto a mortgage can be risky, and have considered that, and in all faith have trust that this would work. The intention would be for no equity to be taken by her once she is removed from the deeds, even if she could try to take it etc.

Pardon me?

It was just another thought, ideally don't want to and the lodger income was my main focus.

Its not borderline ... but you need a lodger or a fake wage to make up the difference?
Its not borderline ... unless you consider that you have to both sell your house for top dollar, and buy for bottom ? (how come it wont end up the other way round? )

Sorry but I think you are kidding yourself.

csgohan4

You have everything to gain but you sister has everything to lose.


Money and family simply do not mix, what if you two fall out, you may be forced to sell your house or she may stop contributing to the mortgage, what then???


It's all about me, myself and I, what does your sister have to say about this?


Later down the line may not be so late if she marries someone with a decent income and they want to buy together with kids, what then? Will you stump up the stamp duty , even though she did you a favour in putting her name on the mortgage?