Bath Building Society is launching ‘rent a room’ mortgages for borrowers with spare bedrooms.
The product allows individual applicants to borrow more by renting out a room and using the rent towards the mortgage payment.
The mortgages are available on the same rates and terms as Bath’s standard residential mortgages and its 95 per cent parent assisted mortgages.
The ‘rent a room’ mortgages’ maximum LTV is up to 85 per cent or 95 per cent with collateral.
Bath Building Society chief executive Dick Jenkins says: “Increasingly people are starting to realise that rent is more expensive than having a mortgage in the current climate. Many young people are happy with sharing their home with a friend and here we have created an opportunity to use the rent of a friend sharing the property to contribute to the affordability of the mortgage.
“Better still, some can use this arrangement to qualify for tax relief from the government.”
The mortgage allows one tenant and asks for the rental to be based on an independent assessment.
The borrower must have a minimum income of £20,000 before rental income.
Up to half of the loan amount can be covered by rent. The amount of the loan being covered by rent must be no more than four times the borrower’s income.