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Rent-a-room mortgage earns buyers £4,250

Buyers expecting to take on a lodger can now benefit from a new mortgage, which can effectively earn them up to £4,250 in rent totally tax-free.The rent-a-room mortgage has been launched by provider John Charcol and takes into account the fact that government legislation allows people to earn £4,250 from rental income without being taxed on it. John Charcol acts on the proviso that this income is taken for granted and allows borrowers to take out a higher loan. If a second room is going to be rented out, a further £3,188 is added onto expected income. Katie Tucker, product specialist at John Charcol, said: "This is a product that allows people to benefit from a practice that goes on every day already. Many people take a lodger in to help pay the mortgage and bills, so offering a formalised solution goes that one step further." Borrowers must earn a salary of at least £25,000 to take up the scheme and can take out a loan up to 4.25 times their income if single or 3.25 the amount of a joint income. Ms Tucker concluded: "Adding just a few extra thousand pounds to the amount that can be borrowed can make a big difference. This means some can afford to join the property ladder and others can afford two bedrooms when previously they may have been restricted to one."

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