Updated: December 17, 2021

A Guide to Rent-a-Room Mortgages

Renting a room out and looking for a lodger mortgage? Our in-depth guide tells you which mortgage lenders accept lodger income and how to get the best deal.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 17, 2021

Renting out a spare room in your home can be an effective way of raising extra income. When it comes to buying a house, though, having a lodger may not always improve your chances of getting approval for a mortgage.

This guide will give you a better understanding of how rent-a-room mortgages work, which lenders allow lodger income on an application and where to look for any expert guidance you may need.

What is a rent-a-room mortgage?

Technically speaking, there’s no such thing as a rent-a-room mortgage. It is a colloquial term for a mortgage which allows you to take in a lodger. In practice, rent-a-room mortgages – or lodger mortgages – are when your lender considers this rental income as part of your affordability calculation.

If a lender does take it into account, you can potentially borrow more as your overall household income will have increased. Each lender will have their own, specific conditions regarding lodgers in a home. That can be anything from, having a short term tenancy agreement in place, to ensuring that a lodger is not a related family member.

Some lenders, though, will not factor the additional income into an application and merely allow an applicant to have a lodger reside in the property. There are even some providers who outline in a mortgage’s terms and conditions that lodgers are not allowed at all.

The best way to find out which lenders will and which won’t is to seek the help of a mortgage broker who has experience in this area. They’ll be able to identify the right lenders for you, saving you a lot of time and, potentially, some money too.

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How to get a lodger mortgage

Following these steps can help improve your ability to be successfully approved for a rent-a-room mortgage.

Step 1. Get your documents ready

Any mortgage application, regardless of whether it is for a specific lodger mortgage product or not, will need documentation from you. Getting your bank statements ready alongside your proof of address, proof of income and supporting lodger income evidence will help you save time. Such documentation may be a lodger consent form, an assured short term tenancy agreement or proof of continued rental income. Other documents that are often requested can be found in our complete guide to mortgage applications. 

Step 2. Check your credit score.

As your credit score can impact your application, it’s a good idea to download your report before you start applying. If it’s poor, it can give you the opportunity to rectify any mistakes on your report before making an application. If there is nothing to rectify, you will at least be prepared for any difficulties you may face.

Step 3. Speak to a mortgage broker.

As not all mortgage lenders treat lodger income the same, speaking to an advisor who specialises in rent-a-room mortgages can help ensure your application has the best chance possible. They will know what providers offer the best rates when lodger income is taken into consideration.

If you get in touch we can arrange for a broker we work with, who has prior experience of arranging mortgages in these circumstances, to contact you directly.

Eligibility criteria

Mortgage providers will require you to meet certain criteria to extend you a loan. The exact criteria will vary from lender to lender and how each one conducts an affordability assessment. However, for a rent-a-room mortgage the following factors will be important to your application’s approval.

Evidencing lodger income

If your potential lender accepts lodger income, you will need to be able to evidence it. The exact documentation required depends on the lender, but many will want bank statements or a signed consent form which stipulates what your lodger will pay you. Additionally, a lender will want fully documented evidence of any other income you receive.

Who the lodger is

Often, lenders have strict rules on the lodgers they deem acceptable as part of an application. For instance, some dictate that lodgers cannot be related to the mortgage applicant. Others only allow one lodger at a time.

Deposit requirements

Lodger mortgage or not, the larger your deposit the better the rate you usually receive and the more a lender is likely to extend to you. However, it is possible to successfully apply for a mortgage with anything as low as a 5% deposit. Even then, that is not a hard and fast rule if other factors in your circumstances strengthen your application.

Credit history

With a good credit score you are perceived to be lower risk and more likely to meet your repayments. Lenders like to see a good credit history to offer you the best rates and highest possible mortgage amounts. However, it’s not impossible to apply for a rent-a-room mortgage with a bad credit score.

There are mortgage providers out there who still accept applications from people with a bad credit history. Often, they will want to see other factors that improve an applicant’s chances, like a larger deposit or a regular, dependable income stream – something that additional lodger income may help with.

Which mortgage lenders accept lodger income ?

While some mortgage providers merely allow you to have a lodger but won’t consider a lodger’s rent as a part of your application, there are a number of lenders who do. Many only allow for a capped percentage as part of their affordability calculations.

Here are a few examples of conditions that some providers currently have:

Mortgage Provider Amount of Lodger Income Accepted
Bath Building Society May take into account all lodger rental income
Santander May consider applications with lodgers. Only two lodgers allowed.
Dudley Building Society Caps income at the level set by the Government under its ‘rent a room’ scheme
The Loughborough Building Society Only accepts 50% of lodger income. Plus, the lodger must have been renting from you for at least 3 months.
Penrith Building Society Only accepts 50% of the anticipated rental income.
Vernon Building Society Accepts 50% of the anticipated income. 100% of the income can be used if 2 years evidence of rental payments are provided.
Darlington Intermediaries Allows up to 75% of the amount received, up to the limit set by the Government’s ‘rent a room’ scheme.
Hinckley and Rugby Building Society Up to 50% of lodger income.

What can you do to improve your chances?

If you want to improve your chances of getting a mortgage that allows you to have a lodger, you can do the following:

Make a joint application

Applying for a joint mortgage with a partner or another person who has their own income can improve your chances of success. Importantly, this person cannot be your lodger too. But, as your household income has gone up, providers may be happier to extend you more as that higher amount is more affordable for you.

Increase your deposit

Mortgage providers look more positively on applications with larger deposits. You can increase your deposit in a number of ways which providers find acceptable. One of the most popular is to be gifted equity, often from a family member.

Increase your affordability

Lowering your monthly outgoings means that a provider perceives you to be more capable of making repayments. Look at your monthly budget to see if you can make any cuts anywhere. Or, alternatively, you could look at extending the term on your mortgage application which will lower your monthly repayments (though overall you will pay back more in interest).

Can you take a lodger if you already have a mortgage?

If you are looking to increase your income and have a spare room, it can be tempting to rent it out. However, some mortgage providers outline specifically in their terms and conditions that lodgers are not allowed. So do check as you could get yourself into unnecessary hot water with your lender. Other lenders do allow it, though many stipulate that you must be living in the property at the same time.

When it comes to remortgaging your property, some lenders may consider a lodger’s income in their wider affordability calculations. So, if your potential mortgage provider is one of those lenders, you could be offered a better rate.

Get matched with a broker experienced with lodger mortgages

A broker who specialises in this type of mortgage can prove invaluable in helping your application be approved. Lodger mortgages are complex and eligibility criteria for each specific product varies a great deal from lender to lender. The brokers we work with can help ensure they match you with the right lender for your situation and support you through the application process.

Our no obligation matching service will connect you with a broker with experience in rent a room mortgages. Give us a call today on 0808 189 0463 or make an enquiry to organise a free conversation with an expert.


Do I have to tell my mortgage lender if I get a lodger?

If your mortgage conditions allow a lodger, your agreement will tell you if you need to inform your lender. In general, mortgage providers will want to know as they may view having a lodger as a possible risk.

What is the rent-a-room scheme?

The rent-a-room scheme is an initiative where the government allows you to earn up to £7,500 per year tax free when you let out a furnished room in your home. You can let out as much of your home as you like under the scheme, though that will need to be in line with the terms and conditions in your mortgage agreement.

Ask a quick question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

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FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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