Notifying lender of intention to let on a residential mortgage?

Cheddar_2 · 16 June 2008 at 11:44PM

We are intending on letting our apartment shortly, which is currently on a residential mortgage with Abbey. I am aware that we need to inform the Abbey of our intention, and that they have to approve it before we can go ahead.

Does anyone have experience of doing this, and if so, is there any chance we could be declined? I rang today (anonymously) to test the water, and the advisor told me that there would be an admin fee, but wouldn't disclose the figure.

Would be great to hear of anyone else's experiences :cool:

Claire

gingergoth · 17 June 2008 at 9:22AM

I am in the same situation as you!

looking to rent my place out, but in the middle of a 5 year fixed rate with west brom. i know there is a fee to buy out early and that in theory i will have to reargange to rent my place out!

has any got advise on this?

thanks

Andy

Vomityspice · 17 June 2008 at 9:49AM

I rented out my old house , when I spoke with my insurers, all they did was to tell me all the accidental cover I had (never claimed!), would become invalid. If the tenants trashed the property, they would not pay.

Thankfully, my tenants were people I knew and trusted so this wasn't an issue.

Icey77 · 17 June 2008 at 11:05AM

I would suggest that you review the terms and conditions of your mortgage - most will allow you to let it out with permission.

I called my mortgage company (A&L) to find out the details and then simply wrote them a letter with the required cheque for the "admin" fee :rolleyes: and got a letter back giving me permission for x time period.

You will likely be required to provide details of your tenants to the mortgage company by completing documentation and sending them copies of the AST etc.

So far it's only been a paperwork and cheque writing issue for me - remember that the charges are deductable for tax too!

Good luck

Reds-on-Sea · 17 June 2008 at 1:27PM

question: regarding Gingergoths post, would he not be able to just keep his 5yr fixed rate and rent out as well. I know that a lot of rentals are buy-to-let and have an interest only mortgage, but is there anything to stop someone keeping their repayment mortgage and rent too?

Cheddar_2 · 17 June 2008 at 10:27PM

Can I ask what would happen if we DON'T tell the lender? The reason I ask is that our rental income is slightly less than our mortgage per month, and we are afraid that they'll refuse!

clutton_2 · 17 June 2008 at 10:39PM

you will be in breach of the mortgage contract and your insurance may well not be valid.

in reality - you will probably not be the first to let without permission - but the risks are there

franklee · 18 June 2008 at 12:46AM

Cheddar wrote: »

Can I ask what would happen if we DON'T tell the lender? The reason I ask is that our rental income is slightly less than our mortgage per month, and we are afraid that they'll refuse!

You land the tenant in the poo if something goes wrong as the lender would not have to recognise the tenancy and can dump the tenant. Then if the tenant gets chucked out breaking the AST he sues you for breach of contract if you have any assets left to make it worth his while. Otherwise the tenant ends up out of pocket due to having to move in a hurry.

Cheddar_2 · 19 June 2008 at 2:31PM

I really want to go ahead and ring them to get this sorted, but am concerned that we may get refused as the rental income does not cover the mortgage. Each month, we'll come in at about £90 short, and we're going to make up the difference ourselves.

Is this in itself reason for our lender to refuse us our request to let?

m1ntie · 19 June 2008 at 2:54PM

Some lenders require rent to be 125% of the monthly mortgage payment.

They also take into account the level of equity.

poppysarah · 19 June 2008 at 2:55PM

If they refuse what are you going to do?

Just ring and find out.

Notifying lender of intention to let on a residential mortgage?

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