Lodgers could help with mortgage payments

by Daniel Jones

Taking advantage of the government's Rent a Room scheme could help some property owners pay off their mortgage, figures from first direct have revealed.

The bank found that renting out a spare room for just five years with an offset mortgage could lead to considerable financial gains.

It estimates that by setting up a lodger agreement, monthly rent can be used to make overpayments on a mortgage, allowing homeowners to shave 29 months off their loan.

Over the course of five years, this has the potential to save them more than £1,028 in interest.

Richard Tolchard, senior mortgage product manager at first direct, said: "As long as all necessary precautions have been taken, having a lodger is a really easy way for homeowners to earn more cash and reduce the term of their mortgage."

The Rent a Room scheme enables people to earn up to £4,250 per year tax-free for letting out a furnished room in their home.

  • Landlord and Tenancy News from Lawpack: Solicitor-approved lodger agreement template for getting it in writing when you're renting a room

Published on: September 2, 2011

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