Buying a house to rent (first time)

The property is in Northern Ireland and would be modernised then rented out.

Buyer is domiciled in ROI.

The buyer would not meet lending criteria based upon their income but owns two other personal properties outright (one in NI, other in ROI).

Is it possible to apply for a mortgage based upon the future rental income? Would the other properties need to be used as collateral?

Can anyone advise on whether this is possible and the best approach to take with regard to lenders or brokers etc?

Thanks in advance.

Apart from the cross border/jurisdictional issues this scenario seems similar to this one:

ATC110 said:

Buyer is domiciled in ROI.

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Domicile doesn't influence mortgage, its where they're resident and earning income that does.

I'm assuming resident in ROI for below.

Don't forget the increased stamp duty rate in UK for non-residents.

ATC110 said:

Is it possible to apply for a mortgage based upon the future rental income? Would the other properties need to be used as collateral?

Can anyone advise on whether this is possible and the best approach to take with regard to lenders or brokers etc?

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Yes & no. The property is in UK, so you need a UK based lender. The existing NI property might need to be included as collateral, depending on amount of deposit you have. Its almost impossible to use property in a different jurisdiction as collateral, so they won't be interested in ROI property.

While there's no equivalent of CBIs macro prudential rules to deal with, in practice most UK lenders have a max loan to value of 75% for non-residents, lower in some areas.

UK lenders prefer lending to people with UK income, so rent on NI property might help. They'll only be interest if you've provable annual income of at least £50k (including ROI).

Unfortunately I've no recommendations of brokers in NI. When you're searching, make sure they've experience with non-residents.

Yes, Stamp Duty would be 5%.

The plan would be for the rental receipts to cover the mortgage repayments. Is the reason for the £50k income requirement to cover the mortgage repayments in the event of no rental income?

ATC110 said:

The plan would be for the rental receipts to cover the mortgage repayments.

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Net of taxes, expenses, vacancy periods etc.?
I'm not sure how lenders view such projected non-guaranteed income when it comes to a loan application.

ATC110 said:

The plan would be for the rental receipts to cover the mortgage repayments.

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Bear in mind that there will be a big difference in gross rental receipts and net cashflow once expenses and tax are paid.

ATC110 said:

The plan would be for the rental receipts to cover the mortgage repayments.

Click to expand...

Is the other NI property rented?

When you talk to a broker / bank, make sure to understand if the mortgage will be regulated or unregulated. The UK market is different to here, and its possible to have unregulated lending on BTL properties, which is why they can lend without reference to a multiple of your income. You'll have zero regulatory protection if things start to go bad, and the property will be repossessed and sold in a matter of months.

You need advice from a UK broker, or you might get more insights on a UK (ex-pat) forum where non-resident mortgages would be discussed more if you don't get additional responses here.