I am in the UK and would like to buy a small two bedroom flat. I have about £25,000 for a deposit and will be renting the second bedroom out.
Do Mortgage lenders take this into account as being equivalent to having a greater salary? If so are there any specific lenders I could approach?
No, they will not. There is no proof that you’ll ever actually rent the room out, or for how much. They are only going to qualify you based on what you actually make (and what anyone co-signing the loan makes). Do yourself a favor, get a home that you can actually afford on your own and THEN rent the room out. Then you’ll actually be saving more money than if you got a loan over what you could afford and rented the room out to make your part of it barely something you could afford.
August 29th, 2010 at 8:28 pm
Don’t know about the UK but in the US if the rooms are rented and on a year lease, then they consider the rental income as part of your income.
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August 29th, 2010 at 9:11 pm
Unfortunately, this is not guaranteed income – and you have no existing proof of the income – so a lender is unlikely to take it into account.
It’s a bit like saying "my salary is £15k but give me a mortgage base on a £40k salary because I intend to get a better job"
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August 29th, 2010 at 9:16 pm
Buying a flat that you will be sharing with someone else may go against you when you apply for a mortgage to me, it implies that you cannot afford the mortgage on your own. Lenders may, or may not see it that way.
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August 29th, 2010 at 9:47 pm
If you want more information lovemoney.com gives free impartial advice on mortgages. They’ve even got an online mortgage chat: http://www.lovemoney.com/mortgages/?source=1000603
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August 29th, 2010 at 10:05 pm
No, they will not. There is no proof that you’ll ever actually rent the room out, or for how much. They are only going to qualify you based on what you actually make (and what anyone co-signing the loan makes). Do yourself a favor, get a home that you can actually afford on your own and THEN rent the room out. Then you’ll actually be saving more money than if you got a loan over what you could afford and rented the room out to make your part of it barely something you could afford.
References :