Available on its entire residential mortgage range, the buy-to share option allows consumers to increase the amount they are able to borrow from the lender by taking into account the income gained by renting out a spare room.
Stroud & Swindon indicated that consumers who opted for the buy-to-share option could add over £4,000 to their annual income and, as an example, suggested that a borrower who earned £30,000 per annum and was looking to buy a two-bedroom property, renting out one room, would be able to borrow £137,000. Renting out one room equated to additional income of £4,250 due to the amount of income made from renting out a room without paying income tax.
Commenting, Paul Chafer, sales director at Stroud & Swindon, said: “As house prices continue to rise, more and more first-time buyers are finding it impossible get a foot on the property ladder. Our buy-to-share scheme takes into account the potential income that can be gained by letting a room and increases the amount first-time buyers can borrow – in a sensible sustainable manner.”
However, Peter O’Donovan, mortgage manager at Bestinvest argued the option could be dangerous. He said: “Quite a few borrowers are looking at two-bedroom properties with the intention to rent the second room out, but they can never be certain this room will be taken. With buy-to-let the 120 per cent means there is cover if the room or property is vacant, but it does not seem to be the case with this option.”
