Live in landlord new mortgage

Sid8800

Hi, I'm currently thinking of getting my first house. How would the fact that I intend to rent the second room out affect what mortgage I could get? I couldn't find much info online as this is sort of a half buy-to-let mortgage.

Thanks

ACG

If you are only renting out one of the rooms and living there it will be a normal residential mortgage. You can not use any of the rental income to support your application however so it needs to pass based on your income at the time of application.

Sid8800

Cheers, I thought that might be the case. Doesn't seem totally fair or logical to me but heyho

AnotherJoe

Sid8800 wrote: »

Cheers, I thought that might be the case. Doesn't seem totally fair or logical to me but heyho

Here's why. Someone, lets say he's called "Sid" (not you obviously but how is the lender to know) wants to borrow lets say 5 or 6 x income, whereas the most the lender will do is 4.5x.

So what Sid does is say "oh its alright I'll get a lodger in at £500 a month" not actually intending to. In effect, a self-certification mortgage of the sort they used to have 15+ years ago and that all ended in tears.

Sid8800

Yeah I see that, but isn't that a danger with buy-to-let as well?

ACG

Lenders are clamping down on it massively and have done for a few years. It is obviously against the T&Cs that you live in a property on a BTL mortgage. I have known lenders to find out the owner is living in the property and ask for evidence that they are not/threaten to call in the loan. I am not sure how it ended as I left the bank I was working for at the time, but its a risky thing to do now a days.

Harryp_24

ACG wrote: »

If you are only renting out one of the rooms and living there it will be a normal residential mortgage. You can not use any of the rental income to support your application however so it needs to pass based on your income at the time of application.

Some lenders do.

ACG

Harryp_24 wrote: »

Some lenders do.

The ones I know of only do it in certain circumstances, none of which this would fall in to.

Every day is a school day though so I accept I could be wrong.

dimbo61

You now need to jump through more hoops than a circus act to get a mortgage in 2017 from any lender.
So you need a full time job ( none of that Zero hours contract stuff )
Self employed is going to be tough unless you have 3 years of accounts.
How much you pay for a haircut ! Any hobbies or expensive pets/children/child care !
The list goes on and on.
Now if you are able then getting a Lodger might be a good idea once you have found a suitable property and sorted a mortgage + saved the deposit

minimike2

A lodger can move out with a moments notice and you lose the income. Might not ever get another lodger.
Not a sensible decision to lend to someone based on this income.
You aren't likely to just quit your job for no reason. Nor are proper tenants likely to just up sticks and stop paying (in the vast majority of cases).

The sheer nature of lodgers is that they want flexibility to be transient in the vast majority of cases, which is why they rent rooms rather than get properties with an AST they are tied to.

Harryp_24

ACG wrote: »

The ones I know of only do it in certain circumstances, none of which this would fall in to.

Every day is a school day though so I accept I could be wrong.

My friend has just done it. He had the deposit but not the affordability.

http://www.bathbuildingsociety.co.uk/mortgages/mortgage-products-for-individuals/standard-residential-mortgages/rent-a-room-mortgage

Not saying its a good thing but it is there.