will I have to inform & change my mortgage , I want to rent out my home .

claire44_2

my partner and I have lived in our 3 bed semi since jan 1999 we have unfortunately have the same amount of debt as we owe on our mortage and are currently on a debt managment plan a free one. If we sell our home we cannot raise enough capital to pay off our debts because of the current situation. So we were going to try an IVA however we will have to pay £300 per month for the next 5 years then remortage 75% of the equity to pay off our debts. This is a good idea I first thought however having had our house valued at £115,000 and we owe £72,000 on mortage, same on debt we will end up borrowing a further £50,000 on our mortgage in 5 years time, so we will be in no better place. Still struggling as we will have done an IVA so our rate will go up!
Anyway the picture is set, we are thinking of renting out our home and living in a caravan at the side of our property for 5 years so that we have no rent/mortgage utility bills to pay etc. Inorder to save money what we earn to pay off our debts in full and hopefully a big sum on our mortgage.

Our question is will we have to change our mortage as we are not going to be buying or building another home, we are currently morgaged with Yorkshire building society.
I am affraid that if I inquire with my bank they may say no because of us at present being on a debt management plan, I must state that in all the ten years of living here we have never missed a mortgage payment, loan or credit card payment.

We have had to reduce our credit card & loan paymnets as we are self employed and haven't had the same amount of income for the past 12 months.

Advice would be much appreciated, Thank you

Claire

Pip26

Hi Claire - have a look at/post your comment on the 'Pure Money' Forum.

To get to it from here go to the Forum Jump option below this on the right & scroll up almost to the top. Under the 'Forum' heading you will see 'Pure Money'. Select it and press go. It will take you to a different forum with threads/posts/advice etc of this sort.

Come back to this one to send off for lots of free goodies!!!!!!!

Pip.

lorweld

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silvercar

Have a read here:

http://forums.moneysavingexpert.com/showthread.html?t=1455093&highlight=tenant+consent+let

Basically if you don't ask permission you are in breach of your mortgage terms and conditions. Not a criminal offence but a civil matter. Theoretically the lender could call in the loan, in practice provided you keep up with repayments I have never heard of a lender repossessing.

If you did fall behind and the lender repossessed your tenants could sue you for denying them a home.

Being a landlord requires deep pockets, you need money set aside for maintenance and you have to be able to pay the rent if the property is empty between tenants or you tenant fails to pay the rent.

In your situation I would consider selling. You have plenty of equity in the property, enough to tackle a lot of your debts. Rent cheaply and clear the rest of your debts.

if you want to know the lenders reaction, ask them without giving your name. Remember you would be requesting "consent to let" on a temporary basis with a LTV of 60% and poor credit rating. See what they say.

number3daughter

Hi, Claire.

I Have had to rent out my flat recently as i'm ill and have had to move back in with my parents till I'm better. I had to inform my mortgage company that i was letting my property and they charged me £80 for the admin work but I know people have been charged up to £500 for this. They then added an extra £80 onto my monthly mortgage as well but this will go back down when and if i move back in. It doesnt stop there as you have to infrom you home insurance company as well. Ihave opted for a company to manage my property as i'm not that clued up on the in's and out's of renting plus im not fit enough to do it.
I'm also on a similair debt plan and that didnt matter to my mortgage company as to wether i rented out my flat or not.
I know its not much info but i hope this helps a little. I'm sure plenty of people on here will have helpful info for you.
Good Luck with it all.