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Can I get a buy to let mortgage with no income?
There are lenders willing to offer applicants a buy to let mortgage when they do not have any personal income and do not yet have an income from a property. This falls outside of criteria for most lenders who would not offer a buy to let mortgage unless there was an applicant on the mortgage application that already had an income.
Some lenders have no set minimum income requirement but do insist that there is some sort of income before they will consider lending to these applicants.
There are however a few buy to let lenders they are able to consider applicants with no income at all. For example, this may be a homemaker wishing to buy the property in their own sole name without another applicant with an income going on the application.
With the lenders that allow this, as long as they can become comfortable that the applicant’s household financial situation is in good order and the mortgage is being used correctly, they may consider the case.
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Will every buy to let lender offer me a buy to let mortgage with no income?
Not every lender will offer you a buy to let mortgage with no income. Most lenders will need to see that you have an income, many even having a minimum income threshold such as £25,000.
Also, there are many lenders that will allow a minimal income as long as you can demonstrate that you get one, for example a state pension or profits from your business.
There are only a few lenders that will consider an applicant that does not have an income at all.
Can I Get a residential mortgage with no income?
You will not be able to get a standard residential mortgage if you do not have an income as the amount that you can borrow is linked to your earnings (in addition to the commitments and the debts that you have) so the lender would not be able to offer a residential mortgage until you can demonstrate that you have the income required.
An exception to this are some lifetime mortgages (equity release) for people aged over 55 with no obligations to make monthly payments and the loan rolling up overtime if they are not made.
With these types of mortgages, they can be considered without an income on the basis that repayments are not mandatory so the property will not be repossessed if monthly payments were not made.
What can be the challenges in getting a buy to let mortgage with no income?
Even when approaching a lender that can consider a buy to let mortgage with no income, they still need to be comfortable with the situation before they offer a mortgage.
Scheme abuse
One thing that buy to let lenders will always be on the lookout for is scheme abuse. This is when a person takes a mortgage with the intention of using it in the wrong way.
For example, in the past people have used buy to let mortgages as a way of borrowing more than they ever could have on a residential basis knowing that they were going to move into the property following completion.
Lenders that can offer a buy to let mortgage with no income will be very aware that some people will sometimes try to take a buy to let mortgage and move in to the property once the mortgage has gone through fully.
For instance, if you had a family of five living in a three bedroom home but were now buying a local buy to let with four bedrooms and a bigger garden and the loan that they needed to buy the property was 10 x income, the underwriter may not be comfortable with this situation as it could look like potential scheme abuse.
It does not mean that the persons intention was definitely to move in but it may raise the question of why they would rent out a local property that seemed a lot more suitable for their situation and the fact that they couldn’t have bought it on a residential basis if they had wanted to maybe enough for the lender to decline the application.
In the opposite situation, where you have somebody with children that lives in a four bedroom house with no income but another member of the household has a strong one, and they wish to buy a two bedroom flat to rent out, the lender is likely to be a lot more comfortable that the person’s intention is to rent the property on completion.
Lenders can never fully know what a person’s intentions are, however they decide which applications they agree to and which ones that they are not comfortable with.
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Why would lenders offer me a buy to let mortgage with no income?
Some lenders would be comfortable lending a buy to let mortgage for a person with no income. The reason they can become comfortable is they assess the persons personal situation and if they believe that they are under no financial pressure, do not have bad credit and they clearly have no intention to move into this property, some will be willing to do the deal.
For example, the applicant may be married to a person that brings in the household income but for tax reasons (one may be a higher rate tax-payer), they wish to go on the mortgage and property alone. There are lenders that may be comfortable that the household income and expenditure is under control so the lender expects no problems in getting paid.
As the property will generate a rental income, this will add to income going in to the bank account to pay the monthly mortgage payment.
I have a buy to let mortgage. Am I allowed to live in this property?
If you have a buy to let mortgage, you are not allowed to live in this property and neither are any of your family members.
The mortgage is unregulated and is only to be used for lending against investment properties. If you move into a property with a buy to let mortgage, you will be in breach of the mortgage and there can be major implications with the lender.
How they will deal with this will depend on the lender and the individual circumstances. It may be that they refuse to offer you a new product when your current deal ends (so you remain on the higher variable rate) or even insist that you repay them in full as soon as possible.
If you applied for a buy to let mortgage with no income and the lender believed that you were going to move into the property, they would decline the mortgage.
Now I have a buy to let property that is generating me an income, will I need to declare this income?
If you are earning a rental income from a buy to let property in the UK, you will need to declare this income to HMRC. The amount of tax that you owe will depend on other circumstances and be completely bespoke to you.
You may be able to offset certain costs in order to reduce the amount of tax that you owe. When considering a buy to let property you should always take professional tax advice from a tax adviser or an accountant. However, you can find useful information on tax on Listen to taxman.
More details on declaring your rental income to HMRC.
I want to buy a commercial property. Would I be able to do this with a buy to let mortgage?
Standard buy to let mortgages are to be used on residential properties. They cannot be used to buy commercial properties. For a commercial property, you would need a commercial mortgage.
If you are looking for a commercial mortgage, it’s best to talk to a mortgage adviser that has experience in arranging them. If you would like us to put you in touch with an experienced adviser, please complete the contact form.
I want to get a buy to let mortgage with no income but need to look for a property. Where would you recommend I look to find a suitable property?
If you are looking for a buy to let property, there are various methods to finding one. The old fashioned way is to register with local estate agents telling them the type of property that you are looking for and asking them to contact you when a suitable one comes onto the market.
Nowadays, the more common way of looking for a property for sale is by using website such as Rightmove, Zoopla or On The Market.
These websites show thousands of properties for sale allowing you to look through them quickly to find one that may be of interest. If you find, contact the estate agent selling it to arrange a viewing.
How can I NEED ADVICE help me to get a buy to let mortgage with no income?
When looking for a buy to let mortgage, it’s always recommended to seek professional advice.
If you are looking for a buy to let mortgage with no income, I NEED ADVICE can put you in touch with a qualified mortgage adviser that can assess your full situation to determine if there is a lender that would be willing to lend to you advising the costs and rates involved.
There is no cost for an initial consultation and there is no obligation to go ahead with any advice that you are given.
Conclusion
As it has been illustrated on this page, it is definitely possible to get a buy to let mortgage with no income but the lender needs to be comfortable that finances are in good order and the mortgage is being used correctly before they agree to lend.
If you would like I NEED ADVICE to put you in touch with a qualified mortgage adviser to discuss your situation, please complete the contact form.
They are experienced, which can boost your chances of being approved.
