Buy a place on retail mortgage, let out rooms while living there?

[Deleted User]

I am discussing/planning to buy a property with my partner, we will put our incomes together in order to buy a "large" property. Within the property there are spare rooms which we wish to rent out to two other people. So us two will live there, and two other rooms will be rented out. Four people in the property in total.

 We are in two minds about how to do this, we looked at retail mortgages and they seem to allow short term lodgers, but we want to rent the rooms out for the long term. We also looked at buy to let mortgages, but then I understand we cannot live there, so we would still have to pay rent elsewhere? which defeats the purpose of us owning the place.

So my question is, can we buy a place on a retail mortgage and rent out two rooms in the property for the long term while on a retail mortgage? All of the info online seems to be for people who want to leave the property and rent out the whole place. But we want to live there. 

We can afford the mortgage on the property regardless of if we rent the rooms or not, but we want renters so we can pay off the mortgage quicker. The location of the property means finding someone to rent the room should be easy. There are many young professions looking for rooms.

Thanks

user1977

What do you mean by "retail" mortgage? Residential?

[Deleted User]

user1977 said:

What do you mean by "retail" mortgage? Residential?

Yes residential. 

dimbo61

You and your partner can buy a property with a normal residential mortgage as long as you have the Income and deposit.
You can rent out 1 or 2 rooms to lodgers if you want and use the Rent a room scheme to offset some of the Tax you might need to pay 
Your allowed upto £7500 a year.
Renting to more than One lodger may cause other issues

[Deleted User]

depends on the lender.  Natwest dont accept lodgers but Nationwide will for instance. 

getmore4less

 We are in two minds about how to do this, we looked at retail mortgages and they seem to allow short term lodgers,

What makes you think that?
What do think is short term, 1y 2y 5y?

Any lodger agreement should not be giving long term rights to live in the place.

Be careful you don't end up with something that means you can't get people out.

Review the income tax situation and how you calculate it, not obvious to everyone how things like rent a room works and say included bills.

The issue with more than one lodger is you open up exposure to potential CGT issues

[Deleted User]

getmore4less said:

 We are in two minds about how to do this, we looked at retail mortgages and they seem to allow short term lodgers,

What makes you think that?
What do think is short term, 1y 2y 5y?

Any lodger agreement should not be giving long term rights to live in the place.

Be careful you don't end up with something that means you can't get people out.

Review the income tax situation and how you calculate it, not obvious to everyone how things like rent a room works and say included bills.

The issue with more than one lodger is you open up exposure to potential CGT issues

We would not wish to give them such rights, but we would want to have a lodger in the home to provide extra income in the long term. That is not the same as giving them long term rights as a lodger is it not?

Long term ie forever at least until most of the mortgage is paid off. One lodger at least.

getmore4less

I should have quoted more.

We are in two minds about how to do this, we looked at retail mortgages and they seem to allow short term lodgers, but we want to rent the rooms out for the long term.

That implies you think you can do it long term,  you can as long as the lender allows it in the first place.

there are guides about how to set up the agreement setting boundaries and reasonable notice periods.

Read a few of the lodger threads on here there have been some very good ones on how it sometimes goes a bit wrong. 

It's pretty standard buy a house live in it rent out a room to a lodger or a series of lodgers.

Depending where you are as well as the lodger option which means sharing your property pretty much full time look at  maybe the Mon-Fri option to keep weekends free,  you might find the likes of Airbnb more lucrative and less disruptive(very short term lodgers).

[Deleted User]

Thanks for the advice. 

I think a lodger is more where we want to go, air bnb who knows who will turn up.

We are going to get advice on the double lodger tax situation to see what this would mean for us.