Can rental income (from XH) count towards income for getting a mortgage?

[ChiefFairyCakeMaker]

I've recently separated and moved out but XH is on a very low income and can't afford to buy me out. It's an amicable split and we don't want to sell the house as the kids stay there some nights and it's handy for school, etc but I want to buy another house. My income is not enough to buy a house big enough for me and the kids so XH has offered to rent my half of the house off me. Can he legally do that and would the rental income I got count towards income for me getting a mortgage?

Hope that makes sense! I've also posted this is Money Matters but I thought more people would see it here. Thanks.

You've already put this one in the 'Money' section...

Yes it's legal and rental income always used to be counted toward a mortgage but I think you will find that it will only be counted once (rather than the rest of your income which will probably be tripled, or more, in the calculation). However you must establish some rules on this as your relationship may change. If he meets someone else he may decide he can no longer afford it so you need an agreement between you establishing what you would do in XYZ circumstances. I think the location of the house will also be a factor for lenders in the current market ie likelihood of quick sale if necessary. Good luck.

Thanks Mopswerver, that's really helpful :)

Hi, I'm a mortgage adviser for a bank and rental income is only counted as part of your overall income if it's declared for tax purposes and tax is paid on it. So whether you do the tax yourself or have an accountant, I'd need to verify it through SA302's (kind of the equivalent of a P60 for self employed income) or by an accountatnts reference/books. If you're not paying tax on it it can't be used as income. Now that is my banks policy but as far as I'm aware That's pretty standard. Hope that helps!

Thanks Vino, that's really useful. Do you know how long it would take to get a SA302 - do you have to wait until the end of the tax year like you do for a P60?

Morning yes, you get them at the end of your tax year. The Inland Tevenue don't send them out as standard now, you can just print off an online version. However, lenders want originals, of course! But you can phone IR and get them sent out - as far as I'm aware it's free and they're usually sent out within a couple of weeks. Again, hope that helps!

Thanks for replying Vino, that's very helpful information. It sounds like I wouldn't have proof of my rental income until April 2013 then which is not good as I need to move now....

if the property is jointly owned then you can only claim half the rental income as your income - the other half goes to the other joint owner. hat is how hmrc does it.
not sure how it works if the person renting it half owns it !

if you really eltting it out you woudl need to tell mortgage lender - but if he half owns it anyway he cant really "rent" it can he ? or can he ?

Hi Cestlavielife - you're right it's a funny situation but he'd be renting my half off me. He owns the other half. :)