our mortgage company want to charge for letting!

building

we are looking at renting out our property and i've just found out that they want to charge us £100 as admin fee each time we have a new tenant and they also want to charge us 1% extra interest on our fixed mortgage rate (until november next year) on our mortgage of 4.25%. i htink that is horrendous. any tips. we are thinking of not letting them know as we are thinking of doing short tenancy before selling in the spring but as we are fixed we may need to buy something else. it is also a portable mortgage. company we are with is mortgage express. thanks in advance.

bingo_2

If you property burns to the ground, while you are letting it out, the insurance company will probably not pay out unless the policy covers you to let it out.

If you change your policy to one that does cover you, then you would need to investigate whether Mortgage Express get sent a copy of the new policy, and whether they would then realise that you have broken your mortgage contract ("for your residential use only") and all that that entails (which sounds to me as if they would not just turn a blind eye to it)

I think they have you over a barrel, but to be fair I think all lenders mortgage contracts have a sting in the tail if you want to let out during any "deal" period i.e. fixed rate period.

The alternative would be to redeem the mortgage and place it with another lender who is more considerate, however, I bet that would be more expensive than the extra 1% will cost and another lender may not be able to offer a better rate anyway.

dunstonh

This is normal when trying to use a residential mortgage on a buy to let basis. You need to covert to a buy to let mortgage when you get the opportuity to do it (without penalty or when the extra 1% costs you more than the switching penalties).

herbiesjp

bingo wrote:

I think they have you over a barrel, but to be fair I think all lenders mortgage contracts have a sting in the tail if you want to let out during any "deal" period i.e. fixed rate period.

.

Not really a sting in the tail because they are on a fixed rate, but rather because the OP wants to keep his residntial rate and let the property out.

building

sorry what is OP?

herbiesjp wrote:

Not really a sting in the tail because they are on a fixed rate, but rather because the OP wants to keep his residntial rate and let the property out.

building

what would be the cost of redeeming mortgage and going with someone else? sounds as if best to sell the property then?

bingo wrote:

If you property burns to the ground, while you are letting it out, the insurance company will probably not pay out unless the policy covers you to let it out.

If you change your policy to one that does cover you, then you would need to investigate whether Mortgage Express get sent a copy of the new policy, and whether they would then realise that you have broken your mortgage contract ("for your residential use only") and all that that entails (which sounds to me as if they would not just turn a blind eye to it)

I think they have you over a barrel, but to be fair I think all lenders mortgage contracts have a sting in the tail if you want to let out during any "deal" period i.e. fixed rate period.

The alternative would be to redeem the mortgage and place it with another lender who is more considerate, however, I bet that would be more expensive than the extra 1% will cost and another lender may not be able to offer a better rate anyway.

Bossyboots

opening poster or original poster

Kaminari_2

MX are a pain. It took 6 months to get my B2L mortgage through after several lost paperwork and many chase up phone calls.
A higher interest rate is normal as a B2L mortgage is always higher than a standard residential. The sting is the £100 admin fee. It might be better to ask if you could change your mortgage over to a B2L mortgage if you intend to keep the property for a long time and expect a few different tenants in that period. This would avoid the Admin fee every time you had new tenants.
However if you expect to only have one tenant between moving out and selling the property it might be best to leave things how they are - 1% plus admin fee. 5.25% for a B2L mortage is a good rate.
I would never let a property that has a residential mortgage on it. I think the risk is too great.

Spendless

When I was renting out my residential property I was charged an annual £75 admin fee (annual not per tenant). For the 1st year mortgage was same rate. In the 2nd year (when a lot of BTL mortgages were about) they charged me an additional 1%.