Consent to Lease - stuck between a rock and a hard place!

markc69

Hi,

I purchased a one bed flat in Nottingham back in 2004. I purchased this for 117K with a 10% deposit and a 105K loan.

Having lived in this until 2007, I had a period where I was in financial difficulty, and decided to move out of the property in the short term and rent it out. At the same time, I got offered a positon working out in Australia, and given this oppurtunity, I decided to take it up and give it a go. This is where I still am and want to stay here. In preperation, I went ahead and leased out the property. I believed I went about things in the right way and organised for a fully managed service with a property management company, and organised for my landlords cover etc. It was only when I contacted my mortgage provider recently to give them a correspondence address that I realised I was in breach of my mortgage condiditons (I now realise I was naive here).

Since then, they have been demanding that I need to switch my mortgage over to their consent to lease product. They want me to pay 1250 pounds fee, interest rate of 5.99% and a 2yr tie in with a 3% redemption fee. Alternatively, I can switch to a tracker deal, no tie ins, but the rate is always going to be 5% above the current 0.5% base rate. This also seems excessive to me.

Whilst I agree that I deserve to be paying a higher interest rate, I believe the offerings from Halifax are a bit of a rip-off. What is also worrying is that I do not think the Halifax will allow me to go onto their consent to lease product as my rental income is too small (440 pounds/mortgage currently 310 on interest only 3.5% svr).

I really am not sure what to do now. I have never missed a morgage payment previously. I will be unable to get buy to let from other provider as I will not now have a large enough deposit. If my current provider will not let me go onoto their consent to lease deal, I am worried I will have my property repossessed.

Any help would be greatly appreicated as this situation is very stressfull. Many thanks.

ccvictim

just tell them your back and have moved back in. have your mail redirected to parents for them to open/forward to you!

Mrs_Bumble

Do they know that you are not in the country? That you have relocated because of job and can't sell because of the negative equity? Renting the property out because of the negative equity and only minimal rent achievable because of the rental market in Nottingham?

Fire_Fox

markc69 wrote: »

Hi,

Since then, they have been demanding that I need to switch my mortgage over to their consent to lease product. They want me to pay 1250 pounds fee, interest rate of 5.99% and a 2yr tie in with a 3% redemption fee. Alternatively, I can switch to a tracker deal, no tie ins, but the rate is always going to be 5% above the current 0.5% base rate. This also seems excessive to me.

Whilst I agree that I deserve to be paying a higher interest rate, I believe the offerings from Halifax are a bit of a rip-off. What is also worrying is that I do not think the Halifax will allow me to go onto their consent to lease product as my rental income is too small (440 pounds/mortgage currently 310 on interest only 3.5% svr).

I really am not sure what to do now. I have never missed a morgage payment previously. I will be unable to get buy to let from other provider as I will not now have a large enough deposit. If my current provider will not let me go onoto their consent to lease deal, I am worried I will have my property repossessed.

Any help would be greatly appreicated as this situation is very stressfull. Many thanks.

You have two choices, go onto a BTL mortgage or sell the flat.

Have you also registered for income tax and informed the freeholder/ managing agents so your buildings insurance remains valid?

franklee

You could try the mortgage board, see if they have any ideas:

http://forums.moneysavingexpert.com/forumdisplay.html?f=15

Could you afford the higher rate? Also the worry if interest rates go up, which is likely IMO.

Can you afford to sell?

markc69

Hi,

Thank you for your response.

I have a call organised with the Halifax tomorrow. I have let them know already that I am in Australia because of a work oppurtunity, and have rented out the property to keep hold of it, especially because I will be in negative equity if I sell.

When I asked them earlier what would happen if I did not sign the consent to lease, they mentioned they would put a mark against my account and would not let me take another mortgage with them. To me that sounds fine as I could stay on the current SVR. But on the other hand, my gut feeling is to go for the fixed term consent to lease so that they do not then have the ability to start repossesion proceedings.

Mark.

Mrs_Mopp_2

We have been letting out our house for over ten years, with the permission of the Halifax, because my husband is a clergyman and we have to live in the parish where he works. We need to keep the house for our retirement. We only have about four years and £4200 left to pay on the mortgage, but out of the blue we've been told that we have to transfer to a Consent to Lease Mortgage, which will mean moving from a variable rate to a fixed rate of 5.09% (an increase of about 3% on the current rate) for 3 years AND a one-off 'arrangement fee' of £999 which will be added to our mortgage! This means that overnight our debt has increased by a quarter, and our monthly mortgage payments have increased as well. Whilst we fully accept that we should pay more than the base rate, both the interest rate increase and particularly the arrangement fee seem to be totally out of proportion to the amount owing. If we pay the mortgage off, the meagre savings we have (which were to replace the 30 year old boiler in the property) will be virtually wiped out. I am totally disgusted withe the Halifax. We have been loyal savers for 40 years (though not large amounts, admittedly) and have never missed or been late with a payment in the twenty plus years we have had the mortgage. If we owed £50,000 it would be more proportionate, but for £4,000 it seems totally over the top. We now have to decide whether to pay the rip-off arrangement charge and interest rate increase, or pay off the mortgage and wipe out the little savings we have.

clutton_2

i would call their bluff and just keep paying the mortgage you have been paying - i doubt very much if they will take you to court to repossess the property if you cotinue to pay the mortgage every month.

alternatively make then an offer of 1% above BBR and 50% of the arrangement fee - if they refuse threaten to report them to the FSA - banks hate that

MissMoneypenny

clutton wrote: »

i would call their bluff and just keep paying the mortgage you have been paying - i doubt very much if they will take you to court to repossess the property if you cotinue to pay the mortgage every month.

You are already aware that the tenant will have little or no time to vacate the property if the lender does a repossession, as the lender hasn't given the op consent to let, yet you would still do this? No thoughts to the family that rents the property?:(

clutton_2

""little or no time to vacate the property if the lender does a repossession,""

Please dont exagerate MissMP - repossessions don't happen overnight as we all know.

Lenders DO write to "The occupier" on several occasions - and have done for some time - tenants can then go to court and explain their circumstances to the judge. Judges do not like throwing families out onto the street - ESPECIALLY if they are the innocent victims in all this - and they will usually over-ride a Lenders solicitors plea for possession in 28 days or less if a family are in dire straits.

N79

Plus, MissMoneyPenny if the bank fails to take action then they have tacitly agreed to any new tenancies and thus have acknowledged the rights of the tenants. The bank is aware that the property is let - they either repossess or they acknowledge the new state of affairs.