Lenders’ Affordability rules differ depending on the landlord.
Finding a suitable mortgage match the landlord and the mortgage lender is the priority of the mortgage brokers. Bills included rent
When a lender considers your application for a mortgage, all they want to know is that they can get their money back with interest. Each lender considers risk differently so as you may be suitable for one though not suitable for another. Assured Shorthold Tenancy
Affordability is calculated through a Stress Test, which weighs up the amount you want to borrow against the income. If you have a small number of rental properties and have a decent employed income, a lender may not be interested in your rental income at all. Mortgage lenders use the information to check if you pass the stress test and calculate your affordability risk. How to find good tenants
Passing the Stress Test is the first step, the credit score is the second.
It is important to be transparent from the beginning regarding credit history because if it leads to a declined loan application, it could take 6 – 12 months before lenders regain confidence in you. What is rent to rent
- Typically lenders start assessing portfolios with 4 or more properties, some will mark it at 7 properties and for others, portfolio size is completely irrelevant but will put a cap on the combined portfolio value. What happens at the end of a tenancy
- The more properties you have the more equity they expect you to have across your portfolio. If you have 7 or more properties you are likely expected to have 35% equity to get a decent rate.