If you are a landlord receiving rental income as part, or all of your income, you may wish to apply for a mortgage, or remortgage, your main residence. You may find that this is more complicated and baffling than you first thought.
If this is your sole source of income, ironically many lenders are very hesitant to lend. The reason is that it falls into an area called ‘unearned income’.
The argument lenders use against using this as income is that you may have some properties with little/no debt on them now. But post granting you a loan, you could ramp up the lending and therefore reduce your income and your ability to repay the loan.
It’s not impossible to obtain a rental income mortgage as some lenders do accept this, but for the reasons mentioned above, it can be more difficult than you would think.
If you wish to use rental income as a basis for your mortgage application this should be evidenced in a formal way. For example via income declared to HMRC for the last 3 years. Other criteria will vary from lender to lender and the usual affordability rules apply.
Lenders will consider the 2-3 year income period submitted to work out the level of borrowing they will offer.
As you can see above, if you are looking for a rental income mortgage your application may not be straightforward. It could require specialist help to get your mortgage approved.
We specialise in this area, so would encourage you to speak to one of the The Team just to see what your options are before progressing too far with an application. This will ensure you get a smooth experience when applying for your mortgage.
A fee of up to 1% of the mortgage amount may be charged depending on your circumstances (ie. £1000 on a £100,000 mortgage). A typical fee is £495 plus we will receive commission from the lender.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Rose Capital Partners Ltd is an appointed representative of PRIMIS Mortgage Network, a trading name of Advance Mortgage Funding Limited which is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some forms of Buy-to-Let. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Rose Capital Partners Ltd. Registration No. 08843654 registered in England and Wales. Registered Address, Leigh Saxton Green, Clearwater House, 4-7 Manchester Street, London W1U 3AE.