Getting a deposit together for your first home is no easy feat, and once you’ve got that sorted, you’ll still need to be able to service the payments on your mortgage. Bringing in a flatmate to help you pay your mortgage might be a good option for you, but it’s important to do your research. Here are some things to consider when it comes to having a mortgage and getting a flatmate.
Flatmates and mortgage pre-approvals
Planning to have a flatmate or two can help you when it comes to a pre-approval for a home loan. However now that certain legal requirements are in place, the bank may request evidence that you do actually have income from a flatmate coming in to service your mortgage. Banks and lenders are aware that situations can change, and they will need to make sure that you have enough income to be able to service your mortgage without a flatmate.
Flatmates and mortgage payments
Due to the conservative nature of the banks’ lending requirements, they will often have a capped amount of how much rental income is able to be put towards your mortgage. You may receive more than that amount in rent, but these limits are to ensure that you’re not overly reliant on a flatmate to supplement your mortgage payments if you end up without one for a period of time.
Paying your mortgage off faster
If you are using rental income on top of your regular payments to get your mortgage paid off faster, you’ll need to take a look at your home loan structure. With certain types of loans, you may incur fees if you pay more than your scheduled amount, or make a lump sum payment. It pays to get in touch with your bank or lender to see what their stance is on making extra mortgage payments.
Pros and cons
If you are going to get a flatmate in to help you pay off your mortgage, you’ll need to consider the full responsibility of what this means. You’ll need to be prepared to deal with any disputes, damages, and any tax or legal liability. You’ll also need to make sure that their rent payments are used exactly as you intend them to – if you want that money going towards your mortgage, avoid using it for everyday expenses.
If you want to find out more about how having flatmates affects your mortgage, get in touch with our expert team today!