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Mortgage company claim I'm subletting

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loulous
loulous Posts: 16 Forumite
in House buying, renting & selling
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?
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Comments

  • CommitedToChange
    CommitedToChange Posts: 1,325 Forumite
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    Which Building society?
  • BoGoF
    BoGoF Posts: 7,099 Forumite
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    If thats their lending criteria then you will have to switch lender.
  • loulous
    loulous Posts: 16 Forumite
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    Chelsea... part of Yorkshire now
  • anselld
    anselld Posts: 8,282 Forumite
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    Having a lodger is not subletting.

    However they can refuse to lend additional funds for whatever reason or non-reason they feel like.
  • teddysmum
    teddysmum Posts: 9,471 Forumite
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    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
    sevenhills Posts: 5,887 Forumite
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    loulous wrote: »
    Chelsea... part of Yorkshire now

    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
    Thrugelmir Posts: 89,546 Forumite
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    loulous wrote: »
    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'.

    Then it's a commercial decision taken by the lender. There's no right to the additional loan to refurbish the bathroom.
  • G_M
    G_M Posts: 51,977 Forumite
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    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
    davidmcn Posts: 23,596 Forumite
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    G_M wrote: »
    (might be worth getting out your original mortgage agreement from your files and reading it carefully first!)

    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
    G_M Posts: 51,977 Forumite
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    davidmcn wrote: »
    Or just download their mortgage conditions from their website - condition 3.2 certainly gives them the right to say no to you having lodgers.
    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)
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