Northern Rock - Consent to Let

Doublespresso

- Anyone knows what is the criteria in which Northern Rock decides whether to grant "Consent to Let"? (a property with residential mortgage to be let out)

- Is it a straight forward/easy process?

- Will they apply a different % rate (it's currently on the SVR)

- Are there any fees involved?

- what happens after the CTL expires, can it be renewed?

many thanks for your help

Cappuccino

Funnily enough I have just phoned Northern Rock about 1 hour ago regarding the same thing. We are 2.5 years into a 5 year fixed mortgage and want to emmigrate to Canada in 12 to 18 months time, so we're looking at renting the property out for the remainder of the fixed rate period at which point hopefully the house prices will have recovered a little.

Suffice to say I am rather annoyed with Northern Rock lately, but now I find that to let a house under a residential mortgage you need to apply for "consent to let" which if approved will cost you £100 for short term (less than 12 months) and £250 for longer term (up to 3 years).

I have no problem with the fees involved (which seem fair) - HOWEVER, in order for them to agree:

1) You need to owe only 70% or less of the sum originally borrowed (we owe about 95% because we've only had the mortgage for 2.5 years, we did put a 5% deposit down but apparently the deposit counts for nothing)

2) You need to be able to claim at least 100% of the mortgage per month with the rent you charge (our mortgage is £850 and in our area we'd probably get a maximum of £600 per month in rental, probably a bit less).

So basically it is very unlikely Northern Rock would consent to let us rent the property despite our joint income now being over £60k and the fact we have never missed a mortgage payment.

So far we've been screwed in the following ways:

1) Bought house in Dec 2006 for £144k with a £7k deposit for a price which at the time was about £6k below the market rate because the seller wanted a quick sale. Now worth £125k at current prices so £20k wiped off the value. Our mortgage is about £130k now so despite paying £7k off and putting £7k deposit on we are still in negative equity. Had the prices even stayed the same we'd be looking at around £15k equity in the house, instead of £5k negative equity.

2) We had a 5.69% fixed rate for 5 years from August 2006 and the interest rates have plummeted so we're paying as much as 4% more interest than those on tracker mortgages.

3) Despite paying way over the odds to Northern Rock for what will be at least 3 years of the fixed rate deal, if we sell the house next year they want the full £5,700 redemption penalty - despite the fact that they will have made well over £30k interest from us, and they are exposed for far less time. No sliding scale, no reduction. I know it's in the T&Cs but it's still pure extortion IMO.

4) Now it seems our ONLY other option would be to rent the property out. We can afford to pay the shortfall between the rent and our mortgage, particularly given the cheap rent prices in Canada - only to find that it is unlikely Northern Rock will ALLOW us to rent.

We were sold a Northern Rock mortgage on the basis of how flexible they were reputed to be, but on the face of it they seem anything but.
Northern Rock is now owned by the government. All it would take is Gordon Brown to add a few policies to make redeeming Northern Rock mortgages, or switching to buy to let, in these troubled times more flexible and affordable.

It's the government's STUPID fault (along with the greedy banks) that this situation came about in the first place. The greedy banks giving 100% mortgages and way more times people's salary than they could afford, fuelling the ridiculous house price rises, and the government's fault for allowing them to do it.

I am probably just cursing myself for being very unlucky with the timings, and

I know a lot of this is not specifically Northern Rock's fault, but given the current climate does anyone else feel they could try to be a bit more flexible and negotiate sensibly?

In summary, we're completely screwed and it's mainly due to conditions created by the stupid government and greedy banks in the first place, who, having created the mess, seem unwilling to make any concessions to help people out of it.

I think we're going to just try to pay all debts off, save like hell and then afford to sell the house and pay the redemption penalty and then get the hell our of this country before the government and banks make an even bigger mess of it!

/rant over.

Erm, hope this gives you the information you need, apologies for the personal rant injected into it

Nonshy

70% LTV

120% of your monthly mortgage payment

rough guidelines

Idonex

I'm in pretty much the same position as Cappuccino. I've been offered a role abroad and i live with my girlfriend in her flat she bought 2 years ago. We want to rent it out while we go but Halifax flat out refused to give us Consent to Let as she doesn't own 25% of the property and the rental income will only be 110% and not 120%. Pretty annoyed right now. Our only option is to try and sell, leave the flat unocuppied and we pay the mortgage still, or not go away.

We don't even mind going onto a new interest rate or paying fees but they won't hear any of it because of the equity and rental yield amounts. Never mind my salary alone could pay the monthly mortgage payments 5 times over...They'd rather have us on the 3.5% SVR than 5.19% odd and a fee for the CTL...

haras_nosirrah

Cappuccino wrote: »

Funnily enough I have just phoned Northern Rock about 1 hour ago regarding the same thing. We are 2.5 years into a 5 year fixed mortgage and want to emmigrate to Canada in 12 to 18 months time, so we're looking at renting the property out for the remainder of the fixed rate period at which point hopefully the house prices will have recovered a little.

Suffice to say I am rather annoyed with Northern Rock lately, but now I find that to let a house under a residential mortgage you need to apply for "consent to let" which if approved will cost you £100 for short term (less than 12 months) and £250 for longer term (up to 3 years).

I have no problem with the fees involved (which seem fair) - HOWEVER, in order for them to agree:

1) You need to owe only 70% or less of the sum originally borrowed (we owe about 95% because we've only had the mortgage for 2.5 years, we did put a 5% deposit down but apparently the deposit counts for nothing)

2) You need to be able to claim at least 100% of the mortgage per month with the rent you charge (our mortgage is £850 and in our area we'd probably get a maximum of £600 per month in rental, probably a bit less).

So basically it is very unlikely Northern Rock would consent to let us rent the property despite our joint income now being over £60k and the fact we have never missed a mortgage payment.

So far we've been screwed in the following ways:

1) Bought house in Dec 2006 for £144k with a £7k deposit for a price which at the time was about £6k below the market rate because the seller wanted a quick sale. Now worth £125k at current prices so £20k wiped off the value. Our mortgage is about £130k now so despite paying £7k off and putting £7k deposit on we are still in negative equity. Had the prices even stayed the same we'd be looking at around £15k equity in the house, instead of £5k negative equity.

2) We had a 5.69% fixed rate for 5 years from August 2006 and the interest rates have plummeted so we're paying as much as 4% more interest than those on tracker mortgages.

3) Despite paying way over the odds to Northern Rock for what will be at least 3 years of the fixed rate deal, if we sell the house next year they want the full £5,700 redemption penalty - despite the fact that they will have made well over £30k interest from us, and they are exposed for far less time. No sliding scale, no reduction. I know it's in the T&Cs but it's still pure extortion IMO.

4) Now it seems our ONLY other option would be to rent the property out. We can afford to pay the shortfall between the rent and our mortgage, particularly given the cheap rent prices in Canada - only to find that it is unlikely Northern Rock will ALLOW us to rent.

We were sold a Northern Rock mortgage on the basis of how flexible they were reputed to be, but on the face of it they seem anything but.
Northern Rock is now owned by the government. All it would take is Gordon Brown to add a few policies to make redeeming Northern Rock mortgages, or switching to buy to let, in these troubled times more flexible and affordable.

It's the government's STUPID fault (along with the greedy banks) that this situation came about in the first place. The greedy banks giving 100% mortgages and way more times people's salary than they could afford, fuelling the ridiculous house price rises, and the government's fault for allowing them to do it.

I am probably just cursing myself for being very unlucky with the timings, and

I know a lot of this is not specifically Northern Rock's fault, but given the current climate does anyone else feel they could try to be a bit more flexible and negotiate sensibly?

In summary, we're completely screwed and it's mainly due to conditions created by the stupid government and greedy banks in the first place, who, having created the mess, seem unwilling to make any concessions to help people out of it.

I think we're going to just try to pay all debts off, save like hell and then afford to sell the house and pay the redemption penalty and then get the hell our of this country before the government and banks make an even bigger mess of it!

/rant over.

Erm, hope this gives you the information you need, apologies for the personal rant injected into it

If your joint salaries are over 60k and your mortgage is probably somewhere around the £650 a month mark, couldn't you overpay like anything over the next 12 months to bring your LTV down. That way you won't be in negative equity and can either sell at the time or rent out? Just a thought

Doublespresso

If one matches the criteria of 70% LTV and rental income is 120% of repayments, will NR give a Consent to Let and continue the same Interest Rate of whatever the previous residentail deal was or do they apply a different % rate (like a BTL for example)?

Cappuccino

haras_nosirrah wrote: »

If your joint salaries are over 60k and your mortgage is probably somewhere around the £650 a month mark, couldn't you overpay like anything over the next 12 months to bring your LTV down. That way you won't be in negative equity and can either sell at the time or rent out? Just a thought

We're currently clearing debts. Our mortgage is £851 per month but I am clearing £10k worth of personal debts from miscellaneous credit cards and past loans etc. Was £10,200 in January - looking to be about £7k by next month and about £3.2k by July. So by October (fingers crossed) this year I will be debt free (my wife will just have her £12k student loan from 6 years of uni).

At that point I can probably save the best part of £1000 per month so by summer/autumn 2010, when we're planning to move, should have £10k or so saved up. Assuming we can sell our house for more or less our remaining mortgage (mortgage level will be around £126k by next summer and we should get that for the house, maybe slightly more) then we can afford to sell, but half of the £10k will go to Northern Rock for early redemption penalty.

We also aim to start overpaying the mortgage from our joint account in a few months once we've paid the money we owe on our sofa (our one remaining joint debt besides the mortgage).

By the sound of it saving up and just cutting our losses (around £25k including redemption penalty *cry*) is our best option - renting doesn't sound feasible. Maybe we'll get lucky and by Autumn 2010 house prices in our area will have risen at least a little, but can't count on it.

Thanks all for the advice though!

toonfish

if you were devious you could just let it and not tell them, obviously ensuring that your house insurance was suitable for a let property. This would be against your mortgage terms and coinditions so could not be recommended.

Cappuccino

toonfish wrote: »

if you were devious you could just let it and not tell them, obviously ensuring that your house insurance was suitable for a let property. This would be against your mortgage terms and coinditions so could not be recommended.

The thought had crossed my mind several times. The two issues are a) if we use a letting agent (which if we're abroad we'll pretty much have to do) they may insist on seeing buy to let or consent to let paperwork before becoming agents and b) I am worried about insurance so would have to make sure the property was definitely insured even without consent from the lender.

Personally I am so annoyed with Northern Rock's extortionate and anal policies that I don't particularly feel any loyalty, and have no problem showing them the somewhat unfair treatment that are starting to show me - but don't want to shoot myself in the a*%# in the process

Even if we overpay our mortgage like hell and somehow manage to get 70%LTV, we'll never get 100% of the mortgage in rent let alone the 120% they are probably looking for for consent to let.

So it's pretty much down to save/sell/cut losses (which will cost us around £25k since 2006) - or play the longer game and rent whilst we're abroad and just don't tell Northern Rock, and hope the house prices have gone up sufficiently by the end of 2011 for us to have made some of our losses back. We'd probably rent in Canada for the first 2 years anyway so there isn;t really a problem keeping the mortgage here and just making up the difference between the rent and the mortgage with our earnings in Canada.

Cappuccino.

Doublespresso

can anyone expand on how the "consent to let" works with regard to the applicable interest rate?

clairet707

we got consent to let from NR just over 18 months ago and its at the same rate you were on if its still in fixed term or the svr if not

dont remember there being a 3 year limit on it when we got it though - I think ours was under 12 months or over 12 months - will have to check that with OH