How to Secure a Buy to Let Mortgage Without a Regular Income
Investing in property can be a lucrative way to generate income, especially with the right mortgage. But what if you don’t have a regular income? Many believe it’s impossible to get a buy to let mortgage without meeting a minimum income threshold, but that’s not entirely true.
Buy to Let Mortgages with No Minimum Income
A buy to let mortgage does not always have a minimum income requirement, which means that lenders do not always require you to meet a specific income threshold to qualify for a mortgage.
Instead, some mortgage products are available for individuals who might have irregular income or rely on various sources other than a regular salary. This could include rental income, pensions, or investment returns. It may even be that they’re a homemaker without an income at all.
Not all lenders offer this as many do have a minimum income threshold, such as £25,000, but criteria changes across different lenders.
To find out which products you are eligible for, you should speak with a professional adviser.
Key Features:
- No strict income requirement with some lenders
- Potential rental income considered in affordability assessments
- Specialist lenders potentially available for unique financial situations
At Kerr & Watson, we understand that every investor’s situation is different, and we can guide you to lenders who recognise your financial situation, even if it doesn’t fit the traditional mold.
You can utilise our buy to let calculators for a guide on affordability.
Find out Your Options
Who Can Benefit from Buy to Let Mortgages With No Minimum Income requirement?
These types of mortgages are particularly useful for:
- Retirees relying on pension income, such as state pension.
- Investors with substantial savings or investment income.
- Individuals living off disability benefits or other allowances.
- Self-employed individuals with fluctuating income or potentially newly self employed with no accounts yet.
Advantages:
- Flexibility to use diverse income sources
- Access to property investment without a regular salary
- Potential to leverage rental income for mortgage repayments
Using Rental Income to Pay Your Mortgage
One of the main advantages of a buy to let mortgage with no minimum income requirement, is the ability to use rental income to cover mortgage repayments.
Lenders will require you to demonstrate that your rental income will be sufficient to cover the mortgage payments, typically with a surplus to account for any additional costs. This is called a stress test which is the calculation that a lender uses when assessing how much they need rental income to be to achieve a certain loan amount.
Different factors can affect the stress test, such as an applicant’s tax position or the product that they choose (for example, some lender’s offer more generous stress tests on a 5 year fixed product, which can allow you to then borrow more money).
Example: If your mortgage payment is £1,300 per month, your rental income might need to be at least £1,875 to cover the mortgage and associated landlord expenses.
To get an accurate view of what you can borrow in your situation, get in touch.
Getting A Buy To Let Mortgage With No Income At All
Some lenders can consider applications for buy to let mortgages for applicants that have no recorded income at all. This may include homemakers or people that are starting a business.
Options are fewer here as most lenders want to see at least some income and to be comfortable that finances at home are under control.
Lenders also look at the plausibility of the application to make sure applicants truly intent to rent the property out and the application is not away of obtaining a residential property when their income would not have allowed them to get a residential mortgage.
In this case, lenders will evaluate whether the type of property that is being bought, the location, the type of property an applicant currently lives in and more to understand the incentive behind the application, to ensure they are comfortable before agreeing to lend.
Conclusion
Investing in property without a traditional income stream is entirely possible with the right guidance and mortgage product. Kerr & Watson can help you navigate the complexities of buy to let mortgages with no minimum income requirements, providing expert advice and access to a network of flexible lenders. Whether you’re retired, self-employed, or have a unique financial situation, we can help you achieve your property investment goals.
Contact Kerr & Watson today to discuss your mortgage needs and find out how we can help you secure the best buy to let mortgage for your circumstances.
