Mortgage Application - Calculating Loan to Income

Hi all,

I'm currently in the process of applying for a mortgage and wondering how the income I receive from a rental property is considered by the banks with regard to calculating Loan to Income (i.e. 3.5 times the applicants income)? My query is as follows:

1) Do the banks take into account my salary + all 12 months of the rent received to calculate the LTI?

2) Do the banks take into account my salary + (all 12 months of the rent received - mortgage repayment) to calculate the LTI?

3) Do the banks take into account my salary + Net income from the rental property (i.e. 12 months of the rent received - mortgage repayment - tax deducations) to calculate the LTI?

Are any of the above examples correct? Also with the above examples, I used 12 months rent, do the banks allow for 12 months or do they only consider 10 / 11 months?

TIA

None of the above. The loan to income calculation is based solely on your income from employment. There is a separate calculation for how your other mortgage and rental income affect the overall affordability, whereby your mortgage repayments are stressed at 2% above the current rate, and your rental income is discounted by 30-50% to allow for taxes and other expenses.

Best regards,
Dave Curry (broker)
https://www.linkedin.com/in/davecurryirl

Thanks Dave, very much appreciate the response