100% of Buy to let rental income used to buy your new residential mortgage
Firstly, I must start by saying that most Mortgage Lenders will NOT take Buy to let rental income into consideration when you are looking to purchase a property to live in. They will merely make sure the mortgage payments on the let property is covered by the rent received, and in some instances by a margin for running costs and future interest rate rises.
Other Mortgage Lenders will only consider property profit if this is a secondary income to a main employed job.
At Niche Advice, we have access to Mortgage Lenders that will take up to 100% of the Buy to let rental income e.g property profit even if this is the sole income received.
So what do we, or more importantly the Mortgage Lenders, mean by ‘property profit’? Well, it’s the entry on your Self-assessment Tax Return under heading UK Property & Land. This depicts the surplus you have made after costs have been deducted and discounts properties abroad. If there is no entry it probably means you posted a lost, perhaps due to renovations, in which case we cannot help until you show a profit on the next return.
If you have forgotten what you put down on your Self-assessment Tax Return this can be viewed under your HMRC web account and is referred to Tax Calculation or SA302.
Depending on the Mortgage Lender may work off the latest years figure for Buy to let rental income or take an average of the last few years, and as a rule of thumb they will lend circa 4 to 5 times the figure.
If you have reduced your buy to let properties since the last Tax Return you will need to let your Mortgage Adviser know and seek their professional guidance.
Niche Advice offers appropriate advice for applicants looking to obtain a mortgage with the use of Buy to let rental income. To find out more please complete the Contact Form on this website or call T: 020 7993 2044.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.