Do I have to prove to a lender that a buy-to-let mortgage rental payment can be covered?

Posted on 18 March 2008

I wish to take a buy-to-let mortgage for £225,000 on a property projected to be worth £300,000 following renovation. The tenants could well be a family member. Do I have to prove to the bank/lender that the rent/mortgage can be definitely covered or is that just all part of the risk?

Hi Andrew,

No the rental income is given by the valuer, based on averages from three local estate agencies for similar properties, and will show as part of the valuation so you have little influence over it.

One thing to mention though, you have to tell the lender if you might let the property to a family member, as a 40% occupation by a family member makes it a regulated mortgage, and subject to different laws. In short, some lenders won't lend on it.

The lender will also not be able to consider the projected value of the property after works; they will lend based on the current purchase price.

 

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