Rental options without buy to let mortgage

c247

Apologies if this should be posted in the mortgages thread. My question is whether it is likely to be possible to rent out a property that I have bought (it is my primary residence) without moving to a specific buy to let mortgage. I bought about 6 months ago and took a 100% mortgage. I now am in negative equity due to the price of houses and couldn't afford to fund the difference if I sell. I would also not be able to make a payment of 25% of the mortgage balance to bring the loan to value ratio on the property to a buy to let type level. My circumstances are such that I am considering renting out the property and moving into cheaper rented accomodation. Before I approach the lender to discuss this I wondered if people had any views as to what their likely response will be.

Thanks in advance

sarkin

well you should tell your lender however not everyone does, as the lender could say no or move you to a higher rate.

Now say you go and live between your flat and your partners flat you could have your lender post all corespondance to this new address.

If you post this in the mortgage section they will tell you you are breaking the law and will go to hell, prison or both.

Having now read this I would make discreet enquiries with your mortgage provider

Premier_2

Refer to the terms of your loan agreement. Normally residential mortgages are offered on the basis they are secured against the property the borrower uses as their main residential home.

If you are no longer using the property for that purpose, you will be in breach of that loan agreement.

If you want to let your property, you will need some form of consent to let either as a variation to your current loan agreement or by transferring the loan to a more appropriate product i.e. a BTL mortgage.

This is no obligation for your lender to provide you with either of these.

If you contact your lender requesting a new mailing address different to that on which they have secured the loan against, their suspicions will immediately be aroused. If you don't request such a change and your tenant starts returning mail back to the lender marked 'gone away', 'no longer at this address' etc, then expect even more trouble.

Contact your lender and discuss with them the difficulties you find yourself in and the options available to you.

FraudBuster

Don't forget to register your new business with HMR&C.

http://www.hmrc.gov.uk/startingup/index.htm

ludlowjim

I have been looking into this recently, and have gone so far as to let my mortgage provider know etc. Initially it looked like it was going to be a no without changing my mortgage to a buy to let, complete with fee and higher rate- but they have changed their mind and will allow it on existing mortgage subject to some conditions such as shorthold tenancy agreement etc.

One thing that is difficult is the requirement of the company for a 125% ration of rent to mortgage payment. This would make my house above market rate in my area- so I am still thinking about this.

Good luck

beingjdc

Does the property have more than one bedroom? If so could you rent out one bedroom, without actually moving yourself?

hearts

Tell no one and rent it out. You have nothing to lose. What are they going to do take the house back. ;-)

Form an orderly queue all the honest folk saying he shouldn't. ;-)

beingjdc

hearts wrote: »

Tell no one and rent it out. You have nothing to lose. What are they going to do take the house back. ;-)

Yes, potentially.

Or, at least, put you on a penalty interest rate, ban you from renting it out, and then you'll be paying the mortgage on the place (empty) and the rent on the other place. You may also find it hard to get insurance on a place that's rented out without the proper paperwork.

poppysarah

Why not rent out a room instead?
search for "rent a room" for the govt website.

Mutton_Geoff

Don't forget to register your new business with HMR&C

I've seen people post this comment a couple of times. You are under no obligation to register with the HMRC. All you must do however is properly account for and pay any taxes due. Even if the mortgage interest and running costs exceed the rental income (they will) then you still need to complete a tax return. What you don't need to do is register as a new business.

poppysarah

Mutton_Geoff wrote: »

Don't forget to register your new business with HMR&C

I've seen people post this comment a couple of times. You are under no obligation to register with the HMRC. All you must do however is properly account for and pay any taxes due. Even if the mortgage interest and running costs exceed the rental income (they will) then you still need to complete a tax return. What you don't need to do is register as a new business.

It all comes down to whether being a landlord counts as being self-employed. You do have to register as s/e within 3 months.