Can I rent out my home?

Fly_Baby

Thrugelmir wrote: »

Renting out sounds such an easy option. But it has a huge number of pitfalls and isnt neccessarily cost effective.

As the OP appears to be in negative equity. I would personally take the view that gambling on an upturn in the property market isnt worth it.

Move in with your Mother, clear your debts then start afresh.

But the OP cannot even sell his property now because it is in NE. Would taking a loan to enable the sale, then repaying the loan, then saving for new a deposit be quicker/easier? At least now he has a property which he can use for his benefit - if people go through all the trouble and expenses to buy a house and cannot afford to live in it, they should be able to get at least something out of their asset.

penguine

Fly_Baby wrote: »

But the OP cannot even sell his property now because it is in NE. Would taking a loan to enable the sale, then repaying the loan, then saving for new a deposit be quicker/easier? At least now he has a property which he can use for his benefit - if people go through all the trouble and expenses to buy a house and cannot afford to live in it, they should be able to get at least something out of their asset.

The problem is, the asset may well continue to decline in value. Although a lot of people seem to think the property market is on the road to recovery now, that seems a little unlikely to me given the wider problems with the economy (unemployment continuing to rise, massive government debt, interest rates that will have to go up at some point in the future).

Thrugelmir

Fly_Baby wrote: »

But the OP cannot even sell his property now because it is in NE. Would taking a loan to enable the sale, then repaying the loan, then saving for new a deposit be quicker/easier? At least now he has a property which he can use for his benefit - if people go through all the trouble and expenses to buy a house and cannot afford to live in it, they should be able to get at least something out of their asset.

Its not an asset at the moment its a liability. So taking any course of action which involves further risk seems rather like getting your credit card out at the casino to win back your losses.

Fly_Baby

penguine wrote: »

The problem is, the asset may well continue to decline in value. Although a lot of people seem to think the property market is on the road to recovery now, that seems a little unlikely to me given the wider problems with the economy (unemployment continuing to rise, massive government debt, interest rates that will have to go up at some point in the future).

I hope very much that the property market is not yet on the road to recovery.

As for the OP's situation, he is only 24 so chances are he will be able to afford his mortgage repayments some time in future. So until that time he can have a tenant effectively paying his mortgage for him plus some top-up from his wages. Why taking a loss selling the property in NE if he might be in a good position to wait it out?

I am a renter myself and don't see what could be so wrong with renting a property out. The landlord is responsible for repairs, for maintenance but it is a pittance compared to what I pay him in rent monthly. So he gets to keep the house and doesn't have to pay for it - the OP could do the same.

Ed_S

I didn't say I couldn't afford the mortgage payments, I can. It's just a question of whether I want to live in my current house, on my own, in an area that's 10 miles from my friends (not that far, but a bit annoying sometimes) and not be able to save any money.

starnac

NR does let people rent out their property under a residential mortgage. You need to apply for consent to let. It involves filling in a form and paying a fee (£199 i think). However you will not be able to remortgage your home under the consent to let. You will then need to get a BTL mortgage.

Starnac

Jed_Bartlett

eddysmiley wrote: »

Jed, what was your LTV when you switched to a buy to let, if you dont mind me asking?

It must have been about 90-95% I think - house worth about £180K at the time, mortgage of about £166K.

miss_corerupted

i have nr and i'm letting my property firstly on a 6 month temp (admin £99) and now a permant on (admin £250!!)

Not my 1st choice i tried to sell, but i have found them quite resanable (sp)

Ed_S

I've requested a Consent to Let pack from NR. I asked them if there was a certain LTV required and he said "Over 70%", does he mean under 70%?

I explained that I would be living virtually rent free with my Mum and he just said to explain everything on the application form.

I've also looked into a lodger (a bit) but i'm not 100% keen on this option, there's a few people on spareroom.co.uk looking for a room in my area though.

EDIT: I also failed to mention (I think) that I've still got 1 year left on my (stepped) fixed term mortgage, so if I tried to sell, not only would I have to get a loan to pay off the negative equity, i'd also have to pay about £3000 in penalties, it'd probably take me a year to repay all of that combined, if not longer.

deadpheasant

I'm in a similar situation too. I'd like to move in with my girlfriend of 2 years. We both bought our houses in the height of the 2007 housing madness. I could only get a mortgage with Northern Rock and I had to get a Together mortgage as I didn't have any savings.

I've been living in it for two years now and have 3 years left of my interest only tie-in period. I'd love to sell the house and be clear of it but that would leave me with a £24,000 deficit (the unsecured loan part of the Together mortgage) which NR will hike up to 13% APR (states that they will add 8% onto the loan as security as I'd no longer have a property to link it to).
So I was looking into renting it out. But I'm a bit wary of ringing NR to find out more info. Was thinking of just renting it out without consent but I know my luck and I bet it would come back to me to haunt me.

The rent I could get would not cover the mortgage payements and I'd have to put in about £200 - £220 in from my own wage every month. But this is fine and I'm happy to do that as long as NR would let me. Of course I'm aware that I'd have to get amended Buildings insurance to suit. (if I rent out the house Unfurnished then I'm right in thinking that the tenant can get their own contents insurance?).

I've been told by a couple of other sources to just rent out the property and don't tell NR - as long as they get their money then there's no harm done. I'm a little unsure about this, but I'm very reluctant to have to pay an extra 1% (or more) on a very interest heavy mortgage and I'm not even sure I'd meet their criteria for a Consent to Let agreement anyway - no payment have ever been missed, it's just the LTV etc.

So I'm stuck between a hard place and Northern Rock...

My ideal situation would be to rent out without consent to a friend who I trust and not tell NR, but we don't live in an ideal world do we?