Why is rental income no good for residential mortgages?

Why is rental income no good for residential mortgages?

10:16 AM, 17th April 2014, About 10 years ago 18

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Can one of your many learned members explain to me why rental income can’t be used to get a mortgage on my main residence?

Over the past few years I’ve reduced my other business to build up the rental side of things. Hubby is on a reasonable wage for working 3 days a week but on trying to re-mortgage our fixed rate deal now over several lenders say they don’t include rental income.

Surely this is crazy, our rents far exceed any mortgages on them, 2 we own outright bring in over 25k pa between them. I’ve tried to explain that being a landlord is my business and main income but they don’t want to know. I actually think that rental income is far more likely to be reliable than paid employment these days.

I just hoped those in the know could explain this thinking.

Many thanks Gillianresidential mortgage

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15:50 PM, 17th April 2014, About 10 years ago

Reply to the comment left by "DC " at "17/04/2014 - 15:36":

I totally agree with your logic about borrowing against my BTLs DC. Hopefully more residential lenders will begin to look at incomes in a more realistic way.

Howard Reuben Cert CII (MP) CeRER

16:10 PM, 17th April 2014, About 10 years ago

Reply to the comment left by "Gillian Schifreen " at "17/04/2014 - 15:28":

Yes, Gillian, they ask about pets

For example, Nationwide's updated online affordability calculator (http://www.nationwide.co.uk/support/support-articles/manage-your-account/budget-planner) lists "Pet costs - vets, food, insurance etc" to be detailed in the required outgoings section.

As per the other thread that we communicated on, I recommend that you take professional whole of market financial advice to help you with your applications.


Sustainer -

18:06 PM, 26th April 2014, About 10 years ago

Reply to the comment left by "Howard Reuben" at "17/04/2014 - 10:55":

Several lenders (all smaller building societies) will accept rental income in their affordability calculations. The criteria mentioned by Howard vary from lender to lender -my own one only accepts up to three/four properties in the portfolio. You just need to shop around and a good adviser can certainly help. The national lenders are going to be the least flexible and most 'box ticking' in their approach, as it's easier for them to say no and just service the plain vanilla borrower. The small local building societies are still making decisions using people rather than computers, which means a good adviser can help you 'stretch' some of the headline criteria, as these societies tend to be more pragmatic in their approach.

Howard Reuben Cert CII (MP) CeRER

21:10 PM, 26th April 2014, About 10 years ago

Reply to the comment left by "Sustainer -" at "26/04/2014 - 18:06":

Hi Sustainer

You're absolutely right HOWEVER the smaller building societies also usually only lend in their own regional areas. For example, a local BS to me (Ipswich BS) stipulates that the borrower (or their Broker) can only be 'allowed' if their post code is one of those listed in their acceptable criteria.

The good news for our own Clients - wherever they are in the UK - is that they can access IBS's products (should they so choose) via my office as we are within their postcode remit.

As always, irrespective of product, lender or region, unless you work with a Broker who knows the market and can advise professionally, the likelihood is (and especially now that the new world of MMR has been born today) that you will be less successful in completing mortgage applications.

This is definitely the time to engage with a full market access Broker.


steve sanders

15:56 PM, 29th April 2014, About 10 years ago

there is another solution. If you have a portfolio of properties, let them through your own Ltd company, and pay yourself a salary from the company. (From April, the first £2k of employers NI is free). Then when you get your S302 form you will have some salary earned income as well as rentals and you should be ok

Kyla Porter

13:36 PM, 18th March 2016, About 8 years ago

I need you as my accountant! for sure!

ray selley

14:11 PM, 18th March 2016, About 8 years ago

I remortgaged my own residential property last year with the HALIFAX
using rental income only . £450,000 interest only loan to age 75 sailed through


19:38 PM, 18th March 2016, About 8 years ago

Reply to the comment left by "ray selley" at "18/03/2016 - 14:11":

I approached the Halifax last year and went through a full mortgage application only to be rejected because I had £2,000,000 pounds worth of borrowings. They automatically reject anyone who has more than £2,000,000 worth of borrowings regardless of your income. They view the debt as being personal rather than business, if the debt was owned inside a limited company you are ok.

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