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Mortgage Question: Renting room to company

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  • 14-02-2010 3:25pm
    #1
    unklerosco
    Registered Users Posts: 7,828 ✭✭✭


    Hi, Just have a question about a mortgage application. We'll be looking to apply for one later this year. At present I am employed full time and my missus is self employed(sole trader).

    We also run a company together(will become a Ltd company over the next few months) thats quite successful. Eventually I will leave full time employment to run this company..

    Anyways, when applying for the mortgage is it possible(or will the banks consider it) to rent a room out to this company?? As we will be converting one of the rooms for a home office to run the businesses(we've 4 all together) and we desperately need an office..


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    #2
    Priapus
    Closed Accounts Posts: 114 ✭✭Priapus


    unklerosco wrote: »
    Hi, Just have a question about a mortgage application. We'll be looking to apply for one later this year. At present I am employed full time and my missus is self employed(sole trader).

    We also run a company together(will become a Ltd company over the next few months) thats quite successful. Eventually I will leave full time employment to run this company..

    Anyways, when applying for the mortgage is it possible(or will the banks consider it) to rent a room out to this company?? As we will be converting one of the rooms for a home office to run the businesses(we've 4 all together) and we desperately need an office..

    Short answer is yes, but it won't make a huge impact on the credit analysis they will perform on your application. Also, you don't need to tell them it's for the business in order for them to be happy to include it as additional income.

    Longer answer gets complicated, so I'll try and keep it brief. Banks usually are quite willing to accept an additional income from room being rented out if that is stated on the application form. However they will give you a max allowance for this revenue stream, say 7k - 8k. Something like that. Assuming they know you will also be working for this LTD in the future, they will realise this income for renting the room to the company, is simply coming from the revenue created by the business, and would ultimately feed through to the net income (i.e. your income) in any case. Obviously there are tax efficiencies to putting the expense through the business. The long and short of it is, it is worth doing but it won't make or break your application. They will see it for what it is, a peter-to-paul transaction.


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