Rental income included in affordability check

Muscat63

I am trying to help my daughter with her mortgage after a relationship breakdown. My income is from rental income on a property (which is mortgage free) and Teachers Pension. Their current mortgage provider will not accept rental income, so we need to switch to a different provider.

Nationwide seemed do-able after an affordability check, but now they’ve reduced the amount they said they will lend us, even though our credit ratings are both very good.

Are there any other providers who would accept my income for mortgage purposes?

Thanks in advance for any help

sal_III

As with any other non-standard mortgage application you are much better off by speaking to a mortgage broker. Even if there is fee involved, it will most likely end up cheaper in the long run, considering his chances of getting you the best deal vs. your chances of stumbling upon it on your own.

kingstreet

Is this a joint purchase for a residence for both of you, or 'joint borrower, sole proprietor' to avoid the SDLT second property surcharge (assuming you own your own home)?

As sal suggested, an independent broker will know how best to piece this together.

Thrugelmir

Muscat63 wrote: »

Are there any other providers who would accept my income for mortgage purposes?

How much can you realistically afford once your own living expenses are covered. This just isn't a number exercise to tick a box. Affordability is key.

Muscat63

Nationwide were keen that we were both on the deeds. So it would be removing my daughter’s ex’s name from the deed and adding mine. I was under the impression there wouldn’t be more stamp duty as they’ve already paid that when they purchased 18 months ago. I assumed it would just be capital gains on our portion when we eventually sell. Have I misunderstood? Yes, we own another property, but this would be our main home, along with our daughter. Ideally we’d like to just help with the capital outlay and monthly outgoings and not be on the deeds.

Thank you so much for your help so far. It’s very complicated and this news from Nationwide has been a blow

Muscat63

Thrugelmir wrote: »

How much can you realistically afford once your own living expenses are covered. This just isn't a number exercise to tick a box. Affordability is key.

Both my husband and I have pensions (we are both 55), as well as rental income from a property. We also both work for the same company in a self-employed capacity - we can choose to work as little or as much as we wish. The problem is that we have left full time work but don’t yet have the tax returns that many mortgage companies require. So there’s plenty of income and very low outgoings because we don’t currently have a mortgage. If we couldn’t afford it we wouldn’t be doing this. We are not risk takers by nature!

sparkey1

If your daughter is married, and simply removing her ex there shouldn't be stamp duty. If not married there may be duty to pay. Also, if you go on the deeds, there may be additional stamp duty.
The 3% stamp duty rules are pretty complicated. See

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/image_data/file/47781/SDLT-diagram.jpg

I think you come under Example 21:

I owns one residential property. He decides to purchase another property jointly with his daughter. The property will be his daughter’s first property. At the end of the day of the transaction, I owns more than one residential property and has not replaced his main residence, so the higher rates will apply.


A previous poster mentioned "Joint Borrower, sole proprietor mortgages" Google that. Furness building society do them for example. That could be your answer.

Muscat63

Thank you, Sparkey1. I have had a look at joint borrower sole proprietor options, but it looks as though that is not a goer as it would be our main residence which is not allowed by some providers of this type of mortgage. So I think we will have to suck up the stamp duty (and hopefully get some back if we sell our other house within the 3 year limit). My daughter is not married.