Should I tell our morgage lenders?

jacobmarley_2

Hi everyone, my first post, please bear with me but really would like your advice.

Ex-boyfriend and I split up in June 2008. We bought our flat together in 2005 on a fixed rate mortgage. We have both moved out. We are renting the flat to a trusted family member. The rent doesn't totally cover the mortgate, boyfriend and I put 200 quid each in a month to keep it going.

But, we did not tell our mortgage company we had done this. We did it as a desperate measure because of negative equity. We are on a fixed rate that comes to an end in 2010.

Can anyone tell me, what would the bank's actions be if we told them what we had done? Would they be happy for us to continue renting the place out - the tenant is trusted and likely to want to be there for a few years. My ex and I are on very good terms.

Does anyone have any ideas? Will the bank want us to sell immediately and put us in negative equity?

beecher

Just make sure your insurance company know as they may not pay out in the case of fire/theft if you haven't told them.

I'd be more concerned about what you're going to do in 2010 when the deal comes to an end and how you're going to get out of negative equity. Would it be better to sell up and deal with it now, rather than dragging it on? If you're having to subsidise it by £400/month just now how will you cope if you're on the Standard Variable Rate and interest rates rocket?

jacobmarley_2

Thanks Beecher, I should have realised about the insurance.

Tbh, I don't think we're in negative equity atm because we bought in an area that was pretty cheap in the first place.
A year before we broke up, we took out a 40k loan against the place - to cover my boyfriend's debts but I agreed to use the flat as security. Which is why we haven't been rushing to sell it off, because we were advised they'd call in the loan.

Part of me would like to get rid but I'm worried I'll be out of pocket.

As for interest rates rocketing - our fixed rate is currently more than 6 per cent so I'm rather hopeful that payments will come down.

But the chances are we'll probably sell in 2010, I'm just wondering whether we should sell up now.

How do you think the bank might react?

silvercar

If you are concerned how the bank would react then ask them anonymously.

If you formally ask them and they say no, what will you do? You are now in breach of the mortgage terms and conditions; this is only a big deal if the lender decides to make a fuss. Options open to the lender include giving you consent to let, moving you to a BTL deal which could mean increasing the mortgage rate or saying no.

Come 2010 if you want to remortgage to a different lender you will need to apply for a BTL mortgage. The alternative is to stay with your current lender, on a deal they may offer or their SVR.

As for the secured loan. If it is secured on the property you cannot sell without paying off the mortgage and the secured loan. You cannot move your main mortgage to a new provider without the secured loan people agreeing a deed of postponement.

jacobmarley_2

Hi Silvercar, thanks for the advice. Yes I'll do the anonymous thing. What does BTL stand for?

_Andy_

BTL = Buy To Let.

1984ReturnsForReal_2

If you formally ask them and they say no, what will you do? You are now in breach of the mortgage terms and conditions; this is only a big deal if the lender decides to make a fuss. Options open to the lender include giving you consent to let, moving you to a BTL deal which could mean increasing the mortgage rate or saying no.
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It could also mean them paying a substantial increase in a deposit.

The average is 40% deposit & bearing in mind they are in negative equity now I doubt this is an option.

jacobmarley_2

1984ReturnsForReal wrote: »

If you formally ask them and they say no, what will you do? You are now in breach of the mortgage terms and conditions; this is only a big deal if the lender decides to make a fuss. Options open to the lender include giving you consent to let, moving you to a BTL deal which could mean increasing the mortgage rate or saying no.
--


It could also mean them paying a substantial increase in a deposit.

The average is 40% deposit & bearing in mind they are in negative equity now I doubt this is an option.

Yes well a 40 per cent deposit is definitely out of the question. It's such a mess. On top of that I'm going to be made redundant - which is why I'm trying to sort things out.

Robert_Sterling_3

Are you on the Electoral Roll at the house which you have let.
Are you on the Electoral Roll at the place where you do live.
or neither
or both?

jacobmarley_2

Robert_Sterling wrote: »

Are you on the Electoral Roll at the house which you have let.
Are you on the Electoral Roll at the place where you do live.
or neither
or both?

Hi robert, I'm still on the electoral roll at the flat that we have let out. I'm not on the electoral roll at my new place.

The person we have lent the flat to pays 900 quid a month in rent through housing benefits. She is not on the electoral roll as far as I know.

Robert_Sterling_3

I am !!!!! footing around so far.
I will come to the point.
You may be doing something dodgy.

Mortgage Company BTL status ; Credit Card Company ( not got your "True Address" )
............................................................................................................................
IS DVLC aware of your true address, Does the Post Office forward your mail?
Is your motor insurance valid i.e. Do they know your "true address".

I will not press this issue.

MSE did not like my reference to a cat hence the !!!!! was substituted by them.