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  • FIRST POST
    • loulous
    • By loulous 13th Jan 18, 11:11 AM
    • 15Posts
    • 5Thanks
    loulous
    Mortgage company claim I'm subletting
    • #1
    • 13th Jan 18, 11:11 AM
    Mortgage company claim I'm subletting 13th Jan 18 at 11:11 AM
    I've applied to borrow additional funds of £10k on my mortgage to have my bathroom refurbished and basement converted.

    We hadn't got very far in to the conversation when the subject of how many people there are in the house. Currently it's only me, but I am advertising for a lodger. I have had lodgers before, and there was no issue about this when I changed my product with the building society last year.

    Apparently the person I was talking to had to talk to the underwriters about me having a lodger. They've refused any further lending based on the fact that I'm 'subletting' and I'm breaking my contract by having a lodger as the mortgage is based on the property being 'my main residential property'.

    Well yes - it's my only property, and I'm not renting out the whole property, just the spare bedroom. I take less than £7.5k a year, so it's under the RAR scheme. And doesn't subletting a term used for those renting from a landlord and then them renting out to a third party?

    The person I was talking to said it's because they changed the criteria, and no one getting a mortgage from them now could have a lodger, because it's business then and not just for residential. Not sure how they come to that conclusion. She also tried to tell me the procedure about changing my mortgage to a buy to let mortgage. I'm renting the room not the whole house!

    Anyway, if you're still with me, thanks for reading. I have the complaints department calling me back on Tuesday so if anyone has come across this before, did you resolve it and how?
Page 1
    • CommitedToChange
    • By CommitedToChange 13th Jan 18, 11:12 AM
    • 1,163 Posts
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    CommitedToChange
    • #2
    • 13th Jan 18, 11:12 AM
    • #2
    • 13th Jan 18, 11:12 AM
    Which Building society?
    Attempting to buy a house
    • BoGoF
    • By BoGoF 13th Jan 18, 11:15 AM
    • 2,838 Posts
    • 2,081 Thanks
    BoGoF
    • #3
    • 13th Jan 18, 11:15 AM
    • #3
    • 13th Jan 18, 11:15 AM
    If thats their lending criteria then you will have to switch lender.
    • loulous
    • By loulous 13th Jan 18, 11:16 AM
    • 15 Posts
    • 5 Thanks
    loulous
    • #4
    • 13th Jan 18, 11:16 AM
    • #4
    • 13th Jan 18, 11:16 AM
    Chelsea... part of Yorkshire now
    • anselld
    • By anselld 13th Jan 18, 11:17 AM
    • 5,492 Posts
    • 5,079 Thanks
    anselld
    • #5
    • 13th Jan 18, 11:17 AM
    • #5
    • 13th Jan 18, 11:17 AM
    Having a lodger is not subletting.

    However they can refuse to lend additional funds for whatever reason or non-reason they feel like.
    • teddysmum
    • By teddysmum 13th Jan 18, 4:26 PM
    • 8,709 Posts
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    teddysmum
    • #6
    • 13th Jan 18, 4:26 PM
    • #6
    • 13th Jan 18, 4:26 PM
    Was it made that you would not be leaving the property for a tenant,but would be staying put and taking a lodger to share ?


    I'd contact head office and put your case to someone there, as it's not unusual to be given incorrect information by inexperienced staff.
    • sevenhills
    • By sevenhills 13th Jan 18, 4:39 PM
    • 827 Posts
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    sevenhills
    • #7
    • 13th Jan 18, 4:39 PM
    • #7
    • 13th Jan 18, 4:39 PM
    Chelsea... part of Yorkshire now
    Originally posted by loulous
    I have a lodger, so believing I had to get permission from my mortgage provider(Coventry), I phoned them up - and they said they did not need to be informed, but he made a note of the phone call.

    • Thrugelmir
    • By Thrugelmir 13th Jan 18, 5:46 PM
    • 56,682 Posts
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    Thrugelmir
    • #8
    • 13th Jan 18, 5:46 PM
    • #8
    • 13th Jan 18, 5:46 PM
    Apparently the person I was talking to had to talk to the underwriters about me having a lodger. They've refused any further lending based on the fact that I'm 'subletting' and I'm breaking my contract by having a lodger as the mortgage is based on the property being 'my main residential property'.
    Originally posted by loulous
    Then it's a commercial decision taken by the lender. There's no right to the additional loan to refurbish the bathroom.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • G_M
    • By G_M 13th Jan 18, 9:44 PM
    • 42,733 Posts
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    G_M
    • #9
    • 13th Jan 18, 9:44 PM
    • #9
    • 13th Jan 18, 9:44 PM
    You often find staff at banks or BSs have little understanding of the difference between subletting and taking in a lodger.

    If you hit an issue with this, always escalate the matter.

    It's also noteworthy that they told you " the mortgage is based on the property being 'my main residential property'. "

    Quite! So make it clear that the property IS your main residence.

    As others have said, there is no obligation on them to lend further, or even to explain why they turn you down, but the staff who make the decision do so based on their internal lending criteria. So where they think you don't comply with the criteria when in fact you do, it is worth escalating the matter.

    I'd be tempted to write a short, clear letter addressed to the mortgage department simply stating that...

    " further to my recent application I can confirm that

    a) the property is my main, and only, residence
    b) the property is not sublet
    c) the propertty is not being run as a business

    Consequently I am comying in full with the terms of my mortgage

    yours sincerely,

    xxxx

    I would not even refer tto the lodgers.

    (might be worth getting out your original mortgage agreement from your files and reading it carefully first!)
    • davidmcn
    • By davidmcn 13th Jan 18, 9:57 PM
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    davidmcn
    (might be worth getting out your original mortgage agreement from your files and reading it carefully first!)
    Originally posted by G_M
    Or just download their mortgage conditions from their website - condition 3.2 certainly gives them the right to say no to you having lodgers.
    • G_M
    • By G_M 13th Jan 18, 10:25 PM
    • 42,733 Posts
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    G_M
    Or just download their mortgage conditions from their website - condition 3.2 certainly gives them the right to say no to you having lodgers.
    Originally posted by davidmcn
    Wow - harsh condition!

    So you can't let your brother, mum, or cousin move in.
    You can't let your boyfriend/girlfriend, husband/wife move in.
    You can't let your mate stay overnight after a hard night at the pub (or when your birthday party ends)

    I suspect condition 3.2 would contravene article 8 of the HRA (right to a private and family life)
    • davidmcn
    • By davidmcn 13th Jan 18, 10:48 PM
    • 6,503 Posts
    • 6,397 Thanks
    davidmcn
    So you can't let your brother, mum, or cousin move in.
    You can't let your boyfriend/girlfriend, husband/wife move in.
    You can't let your mate stay overnight after a hard night at the pub (or when your birthday party ends)
    Originally posted by G_M
    It doesn't say you can't let them stay or move in, just that you can't give them a right to occupy the property.
    I suspect condition 3.2 would contravene article 8 of the HRA (right to a private and family life)
    HRA only affects public authorities, so not relevant here (I don't think even the banks owned by the government are "public" for this purpose).
    • bouicca21
    • By bouicca21 13th Jan 18, 11:30 PM
    • 3,360 Posts
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    bouicca21
    I think 3.2 is meant to prevent sub-letting and is just badly written. I doubt it is meant to prevent the mortgagee moving in a spouse or living with his/her child(ren).
    • katejo
    • By katejo 14th Jan 18, 5:46 PM
    • 3,029 Posts
    • 1,167 Thanks
    katejo
    I have a lodger, so believing I had to get permission from my mortgage provider(Coventry), I phoned them up - and they said they did not need to be informed, but he made a note of the phone call.
    Originally posted by sevenhills
    When I first got a lodger in 2006, I contacted my lender (then Alliance & Leicester) and told them. They sent me a form. It was clear from the form that it was only for tenants occupying the whole property not a lodger. I contacted the lender again. It was a mistake and I didn't need to declare it.

    The OP does need to inform their home/buildings insurer though as many of them do not allow lodgers.
    • Tirian
    • By Tirian 17th Jan 18, 9:29 PM
    • 944 Posts
    • 360 Thanks
    Tirian
    Interesting ... although it may not breach HRA, I suspect there's a good case to be made that it is unfair terms and conditions as drafted and therefore unenforceable.

    Although it may not be *intended* to prohibit spouse/children/family occupying the property, as drafted that is the meaning of the condition.

    We have a mortgage with Chelsea, and we have an au pair (which is a necessity as we both work full time and both commute 90 mins each way). Strictly speaking it would seem that this would prohibit us from having an au pair. Which would mean one of us would lose our job with obvious impact on ability to pay the mortgage. So it's not even very sensible drafting from the point of view of their own interest ...

    As previously pointed out however, they don't need any reason to refuse to extend additional credit. But if they try to make a fuss about breaking the terms of your mortgage by virtue of simply having a lodger, then I very much doubt they'd be able to do anything that would stand up in a court. Not least because lodgers don't typically have a right to occupy the property, you can tell them to get out at any point you like.
    For where your treasure is, there will your heart be also ...
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