With the average first-time property price reaching £156,000, six times the average wage of £26,000, renting a room out for extra income and sharing living costs is the latest way that first-time buyers are helping to pay off the mortgage.
A new type of mortgage called ‘rent a room’ mortgage has been launched by West Bromwich Building Society. The mortgage has a fixed rate of 5.99% for two years and takes into account the £4,250 that can be earned tax free under the Government’s ‘rent a room’ scheme which is added to the borrowers income, effectively meaning that they can borrow more money.
The last six months have seen a 38% rise in the number of rooms advertised on the internet. Whilst renting a room can be an easy way to help with the mortgage, homeowners ideally should not have to rely on a lodger to help pay their mortgage costs. Homeowners also need to remember that taking in a lodger means that they have to keep their property clean, tidy and well maintained. Lodgers will also expect to share living, eating and cooking spaces and not have the privacy of their rented room encroached on. Being a landlord also means bearing the full brunt of costs for furnishing, repairs and refurbishments, something that many first-time buyers fail to take into account when buying, indeed one in three new homeowners will have to repair a broken cooker, one is eight face fixing a broken boiler and three quarters will splash out on a new kitchen or bathroom.
But with the property market still in the ascent many first-time buyers will welcome the chance to consider another avenue to explore when trying to get onto the property ladder.
