First Time Buyer - Rent a room
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Renting a spare room to a friend or colleague has long been a popular way for first-time buyers to get a helping hand with their mortgage repayments.
- What can I afford?
- Do I need a deposit - what are the implications of not using a deposit?
- What is the difference between fixed, discount, tracker, capped - and all the other - mortgage types?
- Can't I just arrange the mortgage myself?
- Does it matter that I have quite a lot of debt?
- What are the options if I share?
But as lenders look for increasingly innovative ways to help cash-strapped buyers onto the property ladder, one or two lenders may offer larger loans to people willing to share their property with a couple of flat-mates.
However, most lenders refuse to take rent from a spare room or two into account because it is not a very secure form of income and you have no track record of it, as you would with a salary or bonus.
As the rental income from spare rooms is not guaranteed it is important that borrowers do not take on a bigger mortgage than they can comfortably afford to repay on their income alone.
So if you are already at the top end of your affordability range it might not be wise to use this option if it is just to further stretch your borrowing ability.
You should consider how you will manage if the spare room is empty for several months.
Nevertheless, if you have a circle of friends needing a room - or a particular friend whom you feel you can rely upon for a long time this will certainly help where monthly payments are a challenge.
Also, the income from renting a room can also be tax free
.If you already have a lodger or are thinking about letting furnished rooms in your home, you can receive up to £4,250 a year tax-free (£2,150 if letting jointly). This is known as the Rent a Room scheme.