Mortgage with rental income - not buy 2 let

SummerSunshine2

I have a decent chunk of money saved just low/poor credit due to not having a credit card/bills in my name etc. I was also not on the electrical roll as I lived in Spain for work.

I’m looking at 2/3 bedroom hours and it’s plausable that I could rent out 2 rooms and this could pay the mortgage, with slate left over. I would be out of pocket by a minimal amount.

Obviously sounds wonderful on paper but would a bank consider this?

getmore4less

Getting lodger income counted towards affordability won't be stateforward.

csgohan4

Banks will not consider lodger income, they will only base things on the now and not if

ACG

You need to be able to prove your income when you apply for a mortgage. You can not prove lodger income on a property you do not currently own.

I had a similar enquiry recently where someone wanted to buy a 5 bedroom house and become a foster carer - but with no accounts, there is no income evidence and the only income they did have would be stopping once they became foster carers.

The second issue is finding a lender who will accept income from a lodger which I can not think of any who will - certainly not mainstream lenders.

I think your chances of this are slim at best.

SummerSunshine2

Ok thanks.

Wishful thinking.

I guess I’m just sick of renting and want a spacious property.

How do buy to let mortgages happen - my landlord has 18 hours

ACG

20-25% deposit and rental income meeting a certain calculation (typically around 145% of the monthly mortgage payment at an assumed interest rate of around 5.5% based on interest only).

But you typically need to be a home owner and have a minimum income of around £20-25k - you also can not live in a BTL property as that would be a breach of the terms of the mortgage.

Im like Mr Bad News in this thread, I dont mean to be. But I would rather be straight to the point.

MortgageMamma

You could consider shared ownership or the government help to buy scheme. It is frustrating to be caught in the rental cycle.

SummerSunshine2

@mortgagemamma I would rather have a one bedroom then a government help to buy as I think you pay mortgage and rent? Sounds like a bad deal.

SummerSunshine2

@acg you aren’t the bearer of bad news, you tell me informative information

Verix

There are lenders that will consider lodger income (even some high street) however the majority would need you to have already been renting the room/s for at least 3 months.

I can only think of one lender who will consider lodger income on a purchase with no history of lodging. Might be worth speaking to a broker to look at this option for you as well as any other potential alternatives.

I personally would also prefer to avoid the help to buy scheme but if it allows you to get on to the property ladder it could be worth it. You own 100% of the house and interest on the 20% equity portion doesn't kick in til the 6th year of ownership.

markfj

I have a few BTL properties, and they are harder to get now days. The last 2 I managed to get on BTL, first I had as a residential mortgage, did them up and then asked for a consent to let, before eventually remortgaging.

It's not for everyone of course as they could just say no, but in 2 cases I had consent to let granted with no problems.