How renting out yr property affects your mortgage

beatnik

If I can't sell my house soon, I will rent it out. My mortgage company has said if we did this (in informal discussions), they will add on another +0.75% on our interest repayment rate.

Do we have to tell them? What are the consequences of not telling them?

Thanks.

puddy

they really are daylight robbers. having said that, i wouldnt risk not telling them, if something goes wrong, then you might be in trouble. what is the impact of having no public liability insurance or lettings insurances if something goes wrong and if you do get that insurance, do they request the ok from the lender? i dont know, im wondering

Debt_Free_Chick

Savvy tenants will want to see that you have the lender's permission to let

stevetodd

beatnik wrote: »

If I can't sell my house soon, I will rent it out. My mortgage company has said if we did this (in informal discussions), they will add on another +0.75% on our interest repayment rate.

Do we have to tell them? What are the consequences of not telling them?

Thanks.

I wouldn't run the risk as the knowledge that you are renting would be in the public domain via the inland revenue, your tenants (letter from your lender would go to the property....I don't think you can redirect mail for long and even so the odd letter slips through the net), tenancy deposit scheme, LA (if you use one, personally I do not), insurance (if you don't tell your insurer and the house burns down your insurance will no longer be valid), council tax. It would really be a can of worms, who is your lender 0.75% seems high.

beatnik

Thanks for the replies. It would seem that telling them is the sensible option. Our lender is the Co-operative Bank, we've got a 2 yr tracker deal at base rate +0.79 expiring Jan 2010. I suppose if interest rates come down further in the next year, then this will compensate for the lender's letting premium.

Home_owner1

I recently moved in with my partner at her place where she has no mortgage. Having done the right thing and told ING Direct that I was moving and that my house was to let, they slapped a 2% increase on my payments. A bit steep, but I'm still on the fixed 4.85% until February 09, 6.85 is bearable until then. Unfortunately the 2% will remain when I move to their standard rate which is 7%, so I'll be paying 9% unless I move. Aside from feeling totally ripped off and held over a barrel, i'm confused as to whether I need a buy-to-let mortgage, or whether I can still apply for a standard remortgage, as I have no other mortgage por rent commitments. Any ideas anyone?

Old_Git

regardless off the mortgage you still need BTL insurance .

hermanmunster_3

Home_owner1 wrote: »

I recently moved in with my partner at her place where she has no mortgage. Having done the right thing and told ING Direct that I was moving and that my house was to let, they slapped a 2% increase on my payments. A bit steep, but I'm still on the fixed 4.85% until February 09, 6.85 is bearable until then. Unfortunately the 2% will remain when I move to their standard rate which is 7%, so I'll be paying 9% unless I move. Aside from feeling totally ripped off and held over a barrel, i'm confused as to whether I need a buy-to-let mortgage, or whether I can still apply for a standard remortgage, as I have no other mortgage por rent commitments. Any ideas anyone?

swap the mortgage to the house you are living in or move to live in the mortgaged property -then you can let out the unmortgaged property and not have to worry about the lenders.

barnaby-bear

Home_owner1 wrote: »

I recently moved in with my partner at her place where she has no mortgage. Having done the right thing and told ING Direct that I was moving and that my house was to let, they slapped a 2% increase on my payments. A bit steep, but I'm still on the fixed 4.85% until February 09, 6.85 is bearable until then. Unfortunately the 2% will remain when I move to their standard rate which is 7%, so I'll be paying 9% unless I move. Aside from feeling totally ripped off and held over a barrel, i'm confused as to whether I need a buy-to-let mortgage, or whether I can still apply for a standard remortgage, as I have no other mortgage por rent commitments. Any ideas anyone?

The increased rate reflects to some degree what the actuaries etc calculate the probabilities of risk are, someone is statistically far less likely to default on their home where they reside than one where they don't (these are usually called residential mortgages)... if you live else where and let somewhere out lets face it there are less consequences for defaulting it's not you that has to move....

An alternative where people move in with partners and particularly if they want a bolt hole is to not move in with your partner but just stay there, "AN AWFUL lot" and rent the rooms out to lodgers, less regulations, tax free, you can get the house back very quickly as lodgers have few rights, you can still have residential mortgage, you can check on it... and lodgers quite welcome a LL they don't see so quite open to this arrangement

PasturesNew

A BTL is a commerical loan. It is a business. Therefore you pay commercial loan rates for it (actually, BTL is a lot less than traditional commercial loans used to be, so count yourselves lucky)

The higher rate reflects the additional risk they are taking - and the fact it is a business transaction.