Just imagine the scenario, you are an individual who wants to get on the property ladder and you’ve found your ideal home, but your income just isn’t going to be enough to get the mortgage you need.
At Ward Goodman Financial Services, we may just have a solution to help you on that first step to getting your home. If the property has a spare bedroom, a Rent a Room Mortgage might be just the answer.
If you rent out a spare bedroom, that rental income can be taken into account when deciding whether you can be offered the mortgage that you need.
Here’s a quick example to explain how a Rent A Room mortgage might work for you:
An applicant earns £28,000pa and wants to buy a two bedroom property for £200,000. The applicant has a 20% deposit, so needs a loan of £160,000 but is struggling to find a lender to go to that loan amount because they only earn £28,000pa income. The applicant has a friend who is looking for somewhere to live and is interested in renting the second bedroom; they do not want to buy a property together as they do not want the long-term commitment. The friend is happy to pay £400 per month to rent the spare bedroom. The rent would cover about £48,000 of the loan and the remaining £112,000 will be covered by the applicants income.
Here’s some of the key requirements:
- Maximum Loan to Value is 85%
- Minimum income of £20,000pa (excluding the rental income) employed or self-employed
- Up to 50% of the loan amount can be covered by the rental income from letting a room in the property. The balance of the loan must be covered by income.
- The amount being covered by the rent must be no more than 4 x the borrower’s income.
- Single applicants only.
If you think that a Rent A Room Mortgage could be the solution to you getting on the property ladder, then why not give our team a call today on 01202 875900