Rental income with no previous years tax return

jakephillips109

Hi there I am new to the forum, I was wondering do lenders accept rental income towards a residential affordability application even without having previous years tax return?
I am employed, with rental properties I have accumulated over the past 8 months. 

Would they accept AST document or bank statements proving rental income?
thanks Jake

K_S

@jakephillips109 Where the rental property has been purchased within the current tax year, some lenders will consider by exception subject to an underwriter assessment. But generally speaking, they ask to see SA302s evidencing property income.

Also, if you have over a certain number of properties (differs across lenders) and are deemed a 'portfolio landlord', that may impact your options as well.

jakephillips109

K_S said:

@jakephillips109 Where the rental property has been purchased within the current tax year, some lenders will consider by exception subject to an underwriter assessment. But generally speaking, they ask to see SA302s evidencing property income.

Also, if you have over a certain number of properties (differs across lenders) and are deemed a 'portfolio landlord', that may impact your options as well.

Thank you for your reply, I have an application with NatWest submitted, I’ve told them about the rental properties I have (4). I’m yet to hear if they need the SA302s. I believe they are snowed under with application!

K_S

jakephillips109 said:

K_S said:

@jakephillips109 Where the rental property has been purchased within the current tax year, some lenders will consider by exception subject to an underwriter assessment. But generally speaking, they ask to see SA302s evidencing property income.

Also, if you have over a certain number of properties (differs across lenders) and are deemed a 'portfolio landlord', that may impact your options as well.

Thank you for your reply, I have an application with NatWest submitted, I’ve told them about the rental properties I have (4). I’m yet to hear if they need the SA302s. I believe they are snowed under with application!

@jakephillips109 Afaik, off of the top of my head NatWest need 2 years of SA302s and TYOs to consider rental income for affordability towards a residential mortgage.

If the loan amount is affordable on just your employed income, you should be fine.

Hopefully I'm wrong and it goes through fine, good luck!

kingstreet

Do you need it for affordability to borrow more; or do you simply want the cost of any BTL mortgage to be excluded from the residential affordability?

If it's the former, K_S is right. If it's the latter, you only have to evidence monthly rent is at least as much as the monthly mortgage payment.

jakephillips109

Thank you both for your replies. I did an AIP also without including my rental income. My income and my girlfriends income was enough to get the loan we needed also. So if they require SA302s, could I get my broker to ask them to leave off the rental income and outgoings and complete application without?

K_S

jakephillips109 said:

Thank you both for your replies. I did an AIP also without including my rental income. My income and my girlfriends income was enough to get the loan we needed also. So if they require SA302s, could I get my broker to ask them to leave off the rental income and outgoings and complete application without?

@jakephillips109 Your broker has almost certainly not included the rental income in the NatWest application income. If they did intend to, they would have already asked for the SA302s from you in advance.

jakephillips109

K_S said:

jakephillips109 said:

Thank you both for your replies. I did an AIP also without including my rental income. My income and my girlfriends income was enough to get the loan we needed also. So if they require SA302s, could I get my broker to ask them to leave off the rental income and outgoings and complete application without?

@jakephillips109 Your broker has almost certainly not included the rental income in the NatWest application income. If they did intend to, they would have already asked for the SA302s from you in advance.

I’m convinced he has included them, but hasn’t asked me for my SA302s as I haven’t filed a tax return yet as it’s the most recent year and first tax year of owning rental properties. Should I suggest filing it now so they have the previous year?

kingstreet

Have you received a copy of the application?

If not, ask for one. You will then be able to see the declared income.

It is routine for brokers to not enter an income which isn't needed for affordability. Customers often don't know nor understand this.

MWT

jakephillips109 said:

I’m convinced he has included them, but hasn’t asked me for my SA302s as I haven’t filed a tax return yet as it’s the most recent year and first tax year of owning rental properties. Should I suggest filing it now so they have the previous year?

Talk to your broker, no point in rushing to file, as if you need the SA302 you'd need two years not one, and if the rental income is excluded you don't need the SA302 to show it.

jakephillips109

Thanks all, spoke to my broker. Had confirmation that if AST shown it will disregard all rental mortgages against my affordability. 

So mine and my girlfriends salaries will cover the loan amount required anyway.