For the Society to consider rental income, when assessing affordability for a residential mortgage application:
- Where the property is currently let, details of the rental history on the property will be required with evidence to support the continued letting of the property.
- The income used would be net of any mortgage payments and adjusted for tax and other property repair costs to give a net income. Where the property is privately rented on a longer-term basis, a small adjustment may be made to account for gaps in tenancy.
- Where a borrower intends to take advantage of the rent-a-room initiative, an assessment of the feasibility must be conducted. The Society will favour applications where an ongoing lodger or shared living situation is in existence. A maximum of 50% of the anticipated rental income, can be considered when assessing affordability subject to the Society being comfortable that sufficient appetite to ‘rent a room’’ exists (for example in major cities, where single accommodation is costly). Where the LTV is in excess of 75% and income derived from the ‘rent a room’ initiative is to be considered when assessing affordability, the case must be referred to our MIG insurers.