Can I use rent a room?

Posted on 10 February 2010 by Kathy


Hi,

I have a house worth about £155-160K and own it outright. I would like to upgrade and relocate and wondered how much I could get a mortgage for. I am single and only earn just under £21K. I pay back a private loan of £380 per month and am hoping to rent out my 2 spare rooms using the rent-a-room scheme in order to start saving money for the relocation. How much of a mortgage do you think I would get if I had my existing house as a deposit for another one? I don't want to overstretch myself but I am happy to continue to rent a room in order to be able to pay back a mortgage. Thank you.

Kathy

As you are probably aware you can earn up to £4,250pa tax free under the rent a room scheme and there are a couple of lenders who will add this figure to your earned income before calculating how much they would lend you.

Subject to your own individual circumstances, I would expect you to be able to raise a mortgage of about £83,000.  Allowing for the fact that you will have additional costs to pay such as Stamp Duty Land Tax, this should certainly allow you to upgrade and relocate without over-stretching yourself.

I suggest that you speak to a good independent mortgage adviser as soon as possible about your plans.

Peter

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