Advice please

arteta1878

I bought a brand new apartment about 16 months ago, and I am on a residential mortgage. Due to a change in circumstances, (my wife falling pregnant) we really could do with moving, but are in a bit of a quandry as
a) I became self employed in November so would not even qualify for a new mortgage at present (plus we only have about 20k equity in the apartment)
b) My mortgage lender has said I cannot rent it out and rent elsewhere ourselves, as it is not a buy to let mortgage.

We are tied into this mortgage provider until March next year, and it would be a 5k penalty in fees if I just sold it, so I obviously want to avoid that at all costs!

How much of a risk is it to just rent it out privately and hope for the best?

Our mortgage payment is really low at the moment due to interest rates, so we could rent this out, and with the difference easily afford to rent a 3 bed semi for about £150-£200 a month extra, so it is really tempting.

Cheers

longtimelurker_2

arteta1878 wrote: »

I bought a brand new apartment about 16 months ago, and I am on a residential mortgage. Due to a change in circumstances, (my wife falling pregnant) we really could do with moving, but are in a bit of a quandry as
a) I became self employed in November so would not even qualify for a new mortgage at present (plus we only have about 20k equity in the apartment)
b) My mortgage lender has said I cannot rent it out and rent elsewhere ourselves, as it is not a buy to let mortgage.

We are tied into this mortgage provider until March next year, and it would be a 5k penalty in fees if I just sold it, so I obviously want to avoid that at all costs!

How much of a risk is it to just rent it out privately and hope for the best?

Our mortgage payment is really low at the moment due to interest rates, so we could rent this out, and with the difference easily afford to rent a 3 bed semi for about £150-£200 a month extra, so it is really tempting.

Cheers

Another thing to consider: how much longer do you anticipate your mortgage payments be really low?

charliee_3

congratulations!
well.. if i were you i would wait until march next year.. you can manage easily in a 1 bed place with a small baby and then when you can get out of your mortgage without the penalty look at your options again...
i know when you are expecting it feels like everything has to be 'right' rom the outset, but they dont even really use a nursery for the 1st few months as they will be in with you.

you cant just rent it out without your mortgage company knowing as it would be illegal and not fair on your tenants..

arteta1878

longtimelurker wrote: »

Another thing to consider: how much longer do you anticipate your mortgage payments be really low?

I thought interest rates are expected to be very low all year to get the economy moving?

charliee wrote: »

congratulations!
well.. if i were you i would wait until march next year.. you can manage easily in a 1 bed place with a small baby and then when you can get out of your mortgage without the penalty look at your options again...
i know when you are expecting it feels like everything has to be 'right' rom the outset, but they dont even really use a nursery for the 1st few months as they will be in with you.

you cant just rent it out without your mortgage company knowing as it would be illegal and not fair on your tenants..

Thank you
It is actually a 2 bed apartment, but we are on a middle floor of 3 and it will be really difficult for my wife if I am not around, getting a pram etc up and down the stairs, and there is no way I can leave it in the communal areas due to H&S regulations.

I do take your point about it being unfair on the tenants though.

charliee_3

we lived on the first floor when we first had ours.. it will be hard if you dont have anywhere downstairs to leave the pram/buggy, but people do manage.. i take it there is no lift??!!
id still say you woudl be foolish to try and move now with everything considered so i'd recommend her to carry the baby in a sling to start with and i used to leave the buggy in the car and just take the carseat bit upstairs... whatever you try, its akward with a baby on your own, spesh if you have shopping etc.. but you find a way round it... get the lightest stuff you can.. we stupidly chose a really heavy system (loola) which was just a total b*gger to cope with on your own with bubs and bags...

or maybe you could speak to the owner of the building and see if there is a storage area you could use to keep the pram out of the way?

charliee_3

this one looks good and apprently is the new celeb and city dweller fave, but id go and see one in the flesh before you buy...
http://strollersandprams.com/strollers/355/Micralite-Toro/reviews.html

Cissi

arteta1878 wrote: »

My mortgage lender has said I cannot rent it out and rent elsewhere ourselves, as it is not a buy to let mortgage.

We are tied into this mortgage provider until March next year, and it would be a 5k penalty in fees if I just sold it, so I obviously want to avoid that at all costs!

How much of a risk is it to just rent it out privately and hope for the best?

Our mortgage payment is really low at the moment due to interest rates, so we could rent this out, and with the difference easily afford to rent a 3 bed semi for about £150-£200 a month extra, so it is really tempting.

arteta1878 wrote: »

I thought interest rates are expected to be very low all year to get the economy moving?

It sounds to me like you're thinking in the really short term so I can't see that it would be worth the risk and hassle! Don't forget that once you get tenants in they are entitled to stay for at least 6 months and they may make it awkward for you to market your property if you did want to sell it by next March (see plenty of other threads on here for the tenants' perspective on renting a place that is also for sale). Not to mention the fact that you would also be tied into renting somewhere - it could be tricky to pull off the timing of your next move so that you didn't lose money along the way.

Apart from that I think it's a really bad idea to rent without your mortgage lender's permission. Apart from anything else, if anything was to happen, you (and your tenant) probably wouldn't be covered by insurance. Plus you've already alerted your mortgage lender to the fact that you may wish to do this so I'd say there is a serious risk of being found out.

My advice would be to stay put for now, start keeping an eye out for interesting places to buy, start viewing seriously next winter and who knows, you may find a really good bargain then. Personally I'd also prefer to move with a fairly young baby rather than when heavily pregnant or at the toddler stage, which may well be what you end up doing if you make an intermediate move into rented accomodation now.

Cissi

By the way, I second the suggestion of storing the buggy in the car (assuming you've got one) - we've done this a lot anyway, to save space in the hall! The idea of a lightweight buggy is also good, or alternatively you could look into something like the Bugaboo (very expensive but we've been very happy with ours which has been in almost constant use for almost 5 years now, it's really versatile). The carrycot is light and easily carried upstairs with a sleeping baby, and you could fold up the base and store it somewhere like the car boot. You can even use the carrycot instead of a moses basket (a shop near us sold proper mattresses for it, suitable for all night). Or there is the Phil&Ted's one which has a nifty "carry bag" for a small baby, and it has the advantage that it can be converted to a double buggy if needed at a later stage. I'm sure there are lots of other, more recent options out there too, but you get the general idea

arteta1878

Charliee, yes you are right there is no lift.

I have thought about this now after reading your replies, and maybe you are right, probably short term thinking going on here, maybe I will be better sitting tight until next March, as I suppose a new baby will make that time fly past anyway!

Cheers folks

dopester

arteta1878 wrote: »

I thought interest rates are expected to be very low all year to get the economy moving?

That is what I expect as well.. except the reason interest rates are so low is because things like houses are plummeting in value (over course of 6-12-24 months.

Keep that in mind.