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[minnie123]

Thinking of renting out my house and moving into one of my dads properties for a couple of years. I have got a fixed mortgage. Do I need to let my mortgage company know? What are the implications of this? Will I have to change to a BTL mortgage and will there be charges? I'm unsure what to do. Any help is appreciated :confused:

[scotti]

have a look here minnie,

http://www.mypropertyforrent.co.uk/g...d_property.php

cheers, scotti

[Jowo]

Originally Posted by minnie123

Thinking of renting out my house and moving into one of my dads properties for a couple of years. I have got a fixed mortgage. Do I need to let my mortgage company know? What are the implications of this? Will I have to change to a BTL mortgage and will there be charges? I'm unsure what to do. Any help is appreciated :confused:

In order

Yes, you need to seek permission from the lender.
Breach of mortgage terms and conditions is serious. Will invalidate any house insurance you have - you need landlords insurance, not residential anyway.
Yes, you will have to change to a BTL.
Probably a charge if they give permission. For example, C&G charge £250. Ask your lender about the process - many have conditions relating to the types of tenancies you can have.

[minnie123]

Why is everything so complicated. So basically my mortgage company could refuse to allow me to rent my house out if they wanted to.. does anyone the likelihood of that? How much more approx are landlords insurances compared to residential.

I don't know what to do now every option I look at it seems am I always stuck here in my house that is way too small for me.

What other costs are involved :

Gas safety check £50?
Landlords ins ??
BTL Mortgage £250?

My rental accounts would show a loss so no tax implications.

[G_M]

You should tell them - but not everyone does.
Get Landlords insurance - then it's valid.
Rent needs to be declared as income - some costs are allowable eg mortgage interest, agents fees, etc

There's lots of regulations these days - get a good book on letting and go over to landlordzone.

[Jowo]

Originally Posted by minnie123

Why is everything so complicated. So basically my mortgage company could refuse to allow me to rent my house out if they wanted to.. does anyone the likelihood of that? How much more approx are landlords insurances compared to residential.

I don't know what to do now every option I look at it seems am I always stuck here in my house that is way too small for me.

What other costs are involved :

Gas safety check £50?
Landlords ins ??
BTL Mortgage £250?

My rental accounts would show a loss so no tax implications.

The product was sold to you on the basis that you were living in it. There would have been much more expensive products available at the time if you wanted it as BTL. You could always sell your property.

There was a thread on here a couple of days ago where a woman was refused by her mortgage company due to the Loan to value ratio, if I remember correctly.

Other expenses - voids, damage and rent arrears by tenants, maintenance expenses, possibly letting agent fees. Landlords insurance isn't necessarily any more expensive than residential.

You will still have to submit a tax return. Losses can be carried forward, I think? Why are you renting it out at a loss?!

[minnie123]

Originally Posted by Jowo

The product was sold to you on the basis that you were living in it. There would have been much more expensive products available at the time if you wanted it as BTL. You could always sell your property.

There was a thread on here a couple of days ago where a woman was refused by her mortgage company due to the Loan to value ratio, if I remember correctly.

Other expenses - voids, damage and rent arrears by tenants, maintenance expenses, possibly letting agent fees. Landlords insurance isn't necessarily any more expensive than residential.

You will still have to submit a tax return. Losses can be carried forward, I think? Why are you renting it out at a loss?!

Selling is what we initially wanted to do but as the price has dropped we no longer have 10% equity in the house to enable us to buy somewhere else. Selling up renting now is not a good idea in my opinion as I think house prices are bumping along the bottom, I would rather stay here and stay on the property ladder if that is my only option.

Renting would be a loss because houses like mine rent out for £575 monthly and the mortgage interest monthly is £678 so it would already show a loss without even taking into account all the other allowable costs. This would have been fine though as I was going to go and live in one of my dads houses which would normally rent out for about £800pcm but he was going to let me rent it for £500pcm.

My plan was you see to rent out mine and live in my dads place while saving enough to enable me to sell up and buy a new house in approx 2 years.

I am an accountant so submitting the tax return and preparing the accounts is no prob for me. A shame I couldn't offset the loss against my employment income.

[00ec25]

Originally Posted by minnie123

I am an accountant .

then if you value your professional standing you will inform your mortgage company. I'm sure you don't want to appear here !!!

[minnie123]

Originally Posted by 00ec25

then if you value your professional standing you will inform your mortgage company. I'm sure you don't want to appear here !!!

Where did I say I wasn't going to inform them? :confused:

[00ec25]

Originally Posted by minnie123

Where did I say I wasn't going to inform them? :confused:

sorry, one of the above posts said not everyone does, I was just having a dig that as a fellow professional you and I do of course operate to a higher ethical standard than "them"

[Thrugelmir]

Originally Posted by minnie123

Selling is what we initially wanted to do but as the price has dropped we no longer have 10% equity in the house to enable us to buy somewhere else. Selling up renting now is not a good idea in my opinion as I think house prices are bumping along the bottom, I would rather stay here and stay on the property ladder if that is my only option.

Renting would be a loss because houses like mine rent out for £575 monthly and the mortgage interest monthly is £678 so it would already show a loss without even taking into account all the other allowable costs. This would have been fine though as I was going to go and live in one of my dads houses which would normally rent out for about £800pcm but he was going to let me rent it for £500pcm.

My plan was you see to rent out mine and live in my dads place while saving enough to enable me to sell up and buy a new house in approx 2 years.

I am an accountant so submitting the tax return and preparing the accounts is no prob for me. A shame I couldn't offset the loss against my employment income.

If you move out and the rent doesn't cover the interest. I fail to see what you are achieving? As an accountant surely you would only do something if it was profitable. At the very least you should be making a post tax profit that enables you to repay capital off your mortgage.

You are doing little more than gambling that property prices will rise. significantly. In the current economic climate this is unlikely.

Best to stick it out and overpay your mortgage. As the costs of buying and selling property wouldn't really make it worth while for someone in your position.

[minnie123]

Originally Posted by Thrugelmir

If you move out and the rent doesn't cover the interest. I fail to see what you are achieving? As an accountant surely you would only do something if it was profitable. At the very least you should be making a post tax profit that enables you to repay capital off your mortgage.

You are doing little more than gambling that property prices will rise. significantly. In the current economic climate this is unlikely.

Best to stick it out and overpay your mortgage. As the costs of buying and selling property wouldn't really make it worth while for someone in your position.

I don't want to do this for any financial gain - the reason is me and my family need more space and as we are unable to move due to a fall in house prices. My dad said I could rent one of his houses at a cheap rent. The house I would be renting is a lot bigger and nicer than my house and has a garden which we want now we have a little one.

I would be renting mine out for £575pcm and paying my dad £500pcm to rent his so I would be no worse off financially and be living in a much nicer house.

[minnie123]

I spoke to my mortgage company (first active) I have to apply and they charge a fee of £100. All sounds positive.

[Fire Fox]

Originally Posted by minnie123

I don't want to do this for any financial gain - the reason is me and my family need more space and as we are unable to move due to a fall in house prices. My dad said I could rent one of his houses at a cheap rent. The house I would be renting is a lot bigger and nicer than my house and has a garden which we want now we have a little one.

I would be renting mine out for £575pcm and paying my dad £500pcm to rent his so I would be no worse off financially and be living in a much nicer house.

You are doing this for financial gain, you are banking on house prices increasing so you have more equity.

You stand to make a huge loss. You will let the house for an average of ten months a year so £5750 income. The interest on your current mortgage deal is £8140 assuming the bank let you remain on the same deal. That's a £2400 per annum shortfall without taking into account any letting agency fees, bills when the house is vacant or repairs. Can you afford £500 a month rent plus at least £200 a month on the old house? Can you afford both places if you don't find a tenant or your tenant doesn't pay his/ her rent?

[Dinah93]

Say it takes 5 years for the property to get back to an acceptable level for you to sell. Gonig by the level of interest you will have as shortfall over that time, plus a contingency for repairs nessisary, redecorating/gardening between tenants it is likely you will pay out at least £15,000 waiting for prices to rise. Obviously 5 years is a guess, however I don't think prices are about to shoot back up again, personally I think they have further to fall first, even if they stablise there is no indicator to show they will start to grow again. Add in the fact we're at a historic low for interest rates, and when your deal ends you'll likely be paying more interest per month than you are now would suggest you'll be paying out more to prop up this 'asset' than you had planned.

Think very, very carefully, a small loss now could save you a lot long term.

[princeofpounds]

Why is everything so complicated. So basically my mortgage company could refuse to allow me to rent my house out if they wanted to.. does anyone the likelihood of that? How much more approx are landlords insurances compared to residential.

It's effectively not your house. Although your name is on the title deeds the bank actually has a first charge on the house through the mortgage. So it's not so surprising.

[minnie123]

Originally Posted by Fire Fox

You are doing this for financial gain, you are banking on house prices increasing so you have more equity.

You stand to make a huge loss. You will let the house for an average of ten months a year so £5750 income. The interest on your current mortgage deal is £8140 assuming the bank let you remain on the same deal. That's a £2400 per annum shortfall without taking into account any letting agency fees, bills when the house is vacant or repairs. Can you afford £500 a month rent plus at least £200 a month on the old house? Can you afford both places if you don't find a tenant or your tenant doesn't pay his/ her rent?

I see what you are saying but I would be making the same loss by staying living here. The house I am renting is mortgage free and owned by my dad - if my house was empty he wouldn't expect me to pay rent on his house. My sister lived their for a year rent free I have just offered to pay rent because I think that I should.

I was obviously hoping that my house would rise and a bit and my equity increase but I know that may not happen. I'm on a fixed deal until October 2010 and I have charges to pay if I sell the house before then which is why I don't want to sell up.

What would you recommend I do in my circumstances? :confused:

[minnie123]

Originally Posted by princeofpounds

It's effectively not your house. Although your name is on the title deeds the bank actually has a first charge on the house through the mortgage. So it's not so surprising.

They said I can rent it out.

[tbs624]

Originally Posted by minnie123

I see what you are saying but I would be making the same loss by staying living here. The house I am renting is mortgage free and owned by my dad

Have you taken your Dad's tax liability on your rental payments into your equations?

[minnie123]

Originally Posted by tbs624

Have you taken your Dad's tax liability on your rental payments into your equations?

No because it's my dads liability not mine. He allowed my sister to live there rent free for a year so he is pleased I am going to be paying him and having to give some back to the tax man won't affect him as he will still be better off than getting no rent at all.