Do I need to inform mortgage company if renting out house?

minnie123

Thinking of renting out my house and moving into one of my dads properties for a couple of years. I have got a fixed mortgage. Do I need to let my mortgage company know? What are the implications of this? Will I have to change to a BTL mortgage and will there be charges? I'm unsure what to do. Any help is appreciated

scotti

have a look here minnie,

http://www.mypropertyforrent.co.uk/guides_renting_a_mortgaged_property.php

cheers, scotti

Jowo_2

minnie123 wrote: »

Thinking of renting out my house and moving into one of my dads properties for a couple of years. I have got a fixed mortgage. Do I need to let my mortgage company know? What are the implications of this? Will I have to change to a BTL mortgage and will there be charges? I'm unsure what to do. Any help is appreciated

In order

Yes, you need to seek permission from the lender.
Breach of mortgage terms and conditions is serious. Will invalidate any house insurance you have - you need landlords insurance, not residential anyway.
Yes, you will have to change to a BTL.
Probably a charge if they give permission. For example, C&G charge £250. Ask your lender about the process - many have conditions relating to the types of tenancies you can have.

minnie123

Why is everything so complicated. So basically my mortgage company could refuse to allow me to rent my house out if they wanted to.. does anyone the likelihood of that? How much more approx are landlords insurances compared to residential.

I don't know what to do now every option I look at it seems am I always stuck here in my house that is way too small for me.

What other costs are involved :

Gas safety check £50?
Landlords ins ??
BTL Mortgage £250?

My rental accounts would show a loss so no tax implications.

G_M

You should tell them - but not everyone does.
Get Landlords insurance - then it's valid.
Rent needs to be declared as income - some costs are allowable eg mortgage interest, agents fees, etc

There's lots of regulations these days - get a good book on letting and go over to landlordzone.

Jowo_2

minnie123 wrote: »

Why is everything so complicated. So basically my mortgage company could refuse to allow me to rent my house out if they wanted to.. does anyone the likelihood of that? How much more approx are landlords insurances compared to residential.

I don't know what to do now every option I look at it seems am I always stuck here in my house that is way too small for me.

What other costs are involved :

Gas safety check £50?
Landlords ins ??
BTL Mortgage £250?

My rental accounts would show a loss so no tax implications.

The product was sold to you on the basis that you were living in it. There would have been much more expensive products available at the time if you wanted it as BTL. You could always sell your property.

There was a thread on here a couple of days ago where a woman was refused by her mortgage company due to the Loan to value ratio, if I remember correctly.

Other expenses - voids, damage and rent arrears by tenants, maintenance expenses, possibly letting agent fees. Landlords insurance isn't necessarily any more expensive than residential.

You will still have to submit a tax return. Losses can be carried forward, I think? Why are you renting it out at a loss?!

minnie123

Jowo wrote: »

The product was sold to you on the basis that you were living in it. There would have been much more expensive products available at the time if you wanted it as BTL. You could always sell your property.

There was a thread on here a couple of days ago where a woman was refused by her mortgage company due to the Loan to value ratio, if I remember correctly.

Other expenses - voids, damage and rent arrears by tenants, maintenance expenses, possibly letting agent fees. Landlords insurance isn't necessarily any more expensive than residential.

You will still have to submit a tax return. Losses can be carried forward, I think? Why are you renting it out at a loss?!

Selling is what we initially wanted to do but as the price has dropped we no longer have 10% equity in the house to enable us to buy somewhere else. Selling up renting now is not a good idea in my opinion as I think house prices are bumping along the bottom, I would rather stay here and stay on the property ladder if that is my only option.

Renting would be a loss because houses like mine rent out for £575 monthly and the mortgage interest monthly is £678 so it would already show a loss without even taking into account all the other allowable costs. This would have been fine though as I was going to go and live in one of my dads houses which would normally rent out for about £800pcm but he was going to let me rent it for £500pcm.

My plan was you see to rent out mine and live in my dads place while saving enough to enable me to sell up and buy a new house in approx 2 years.

I am an accountant so submitting the tax return and preparing the accounts is no prob for me. A shame I couldn't offset the loss against my employment income.

00ec25

minnie123 wrote: »

I am an accountant .

then if you value your professional standing you will inform your mortgage company. I'm sure you don't want to appear here !!!

minnie123

00ec25 wrote: »

then if you value your professional standing you will inform your mortgage company. I'm sure you don't want to appear here !!!

Where did I say I wasn't going to inform them?

00ec25

minnie123 wrote: »

Where did I say I wasn't going to inform them?

sorry, one of the above posts said not everyone does, I was just having a dig that as a fellow professional you and I do of course operate to a higher ethical standard than "them"

Thrugelmir

minnie123 wrote: »

Selling is what we initially wanted to do but as the price has dropped we no longer have 10% equity in the house to enable us to buy somewhere else. Selling up renting now is not a good idea in my opinion as I think house prices are bumping along the bottom, I would rather stay here and stay on the property ladder if that is my only option.

Renting would be a loss because houses like mine rent out for £575 monthly and the mortgage interest monthly is £678 so it would already show a loss without even taking into account all the other allowable costs. This would have been fine though as I was going to go and live in one of my dads houses which would normally rent out for about £800pcm but he was going to let me rent it for £500pcm.

My plan was you see to rent out mine and live in my dads place while saving enough to enable me to sell up and buy a new house in approx 2 years.

I am an accountant so submitting the tax return and preparing the accounts is no prob for me. A shame I couldn't offset the loss against my employment income.

If you move out and the rent doesn't cover the interest. I fail to see what you are achieving? As an accountant surely you would only do something if it was profitable. At the very least you should be making a post tax profit that enables you to repay capital off your mortgage.

You are doing little more than gambling that property prices will rise. significantly. In the current economic climate this is unlikely.

Best to stick it out and overpay your mortgage. As the costs of buying and selling property wouldn't really make it worth while for someone in your position.