Don't want buy to let mortgage

cj33

I recently relocated 400 miles to start a new job. My problem is that I can't sell my house so I've had to rent it out. I have foolishly informed my mortgage lender of my change of correspondence address and they have now written to me telling me that I need to go onto a buy to let mortgage if I rent my house out. I only have one mortgage and do not intend to buy another property. The new mortgage product has a much higher interest rate than I am paying now and there is a huge arrangement fee which I can't afford. The LTV is 75% at the moment and if I went onto the buy to let mortgage the rental income wouldn't cover my interest only mortgage payments. Do I have to get a buy to let mortgage? Have I got any other options?

I'm really worried as my tenants have already moved in and signed a 6 month tenancy agreement. I only want to rent the house for 1 year until the housing market picks up again.

andrewmp

Yes, you need to get a buy to let mortgage. Unless they'll give you short term consent to let, which it seems they won't from what you are saying.

What are you planning to do in a year's time?

cj33

I'm hoping I'll be able to sell in a years time.

I cut a long story short earlier. Before I rented out my house I did speak by phone to my mortgage lender who advised me about the buy to let mortgage. The letter they have sent me now refers to "some changes to your mortgage", which I assume means the buy to let product.

silvercar

No harm in asking again for consent to let, emphasise that this is temporary while you are relocating away.

Conrad

You wont get a B2L with another lender as the rent doesn't cover the mortgage payments.
As such I also would expect your current lender to decline the B2L application.

Talking hypothetically, in such a situation I have heard people tell thier lender they have now moved back in to the home.
The biggest issue in this event will be insurance. If a borrower informs a lender they are living there, but then switch to B2L insurance, this could trigger a cover letter from both old and new insurers to the lender.

Some take a chance and keep thier existing insurance, but the grave risk then is that tenants burn the place down, in which case the residential insurance policy wont meet the claim. People say to me the insurer won't know it was let, but this is pure muppetry - any insurance claims loss adjuster worth her salt will eaily discover the truth by simple simple credit searches, talking to neighbours, examining correspondance, photos and so on at the scene.

silvercar

Conrad wrote: »

You wont get a B2L with another lender as the rent doesn't cover the mortgage payments.
As such I also would expect your current lender to decline the B2L application.

Talking hypothetically, in such a situation I have heard people tell thier lender they have now moved back in to the home.
The biggest issue in this event will be insurance. If a borrower informs a lender they are living there, but then switch to B2L insurance, this could trigger a cover letter from both old and new insurers to the lender.

Some take a chance and keep thier existing insurance, but the grave risk then is that tenants burn the place down, in which case the residential insurance policy wont meet the claim. People say to me the insurer won't know it was let, but this is pure muppetry - any insurance claims loss adjuster worth her salt will eaily discover the truth by simple simple credit searches, talking to neighbours, examining correspondance, photos and so on at the scene.

Commenting purely on the insurance point, many main stream insurers offer insurance for tenanted property, so a notification from them shouldn't raise any eyebrows.Obviously an insurer specialising in let properties would be an obvious flag.

Direct line now offer insurance through directlineforbusiness.com. Alan boswell, previously specialised in tenanted property but now offer residential insurance, so would also look legit.

Grz.26

I am in the process of remortgaging over a 10 year stretch, but i asked my lender if i wanted to let out my property in this time frame what would happen regarding BTL mortgage.

They said they are legally obliged to keep you on the same mortgage, but have to pay something like £199 fee. Im not sure if anyone else has has experience with this?

Rich

andrewmp

Every lender is different. Mine charge £200 and then bump the interest rate up by 0.5%.

cj33

Thanks for all the advice, very interesting. I have changed to business insurance but with the same provider. I'm going to ignore the letter for a week or two and if they chase it up I'll ask for a short term consent to let. Hopefully mortgage lender will be reasonable!