So my wife and I bought our flat about 6 years ago, with the intention of eventually renting it out when we buy a house. So that time has arrived and I would like to know, can we rent out the flat, and declare the rental payments as an extra income, and apply for a bond on a new house or would the bank not see the rental as extra income and will require that we will be able to afford both properties in regards to them approving a second bond?
It depends from bank to bank. Some years ago, most banks recognised that as an income. Over the years, a few stringes were added. 1st you need to have a rental contract of at least 6 months old. Then they came with only a % being used as an income. This % varies from bank to bank and can be as little as 50% of the rental income. You need to contact a few banks to get the most favorable deal.