B2L Mortgage necessary for rental?

airchie

Hi guys,

Following a previous question posted in here I went to a free, all of market mortgage broker for some advice on changing my mortgage.
My current fixed rate was about to expire and go to SVR.
Its currently and B2L and I looked at going to another B2L fixed for two years.
Do I absolutely need a B2L if I'm letting my place out?

So After the meeting, I'm looking at going onto a fixed B2L mortgage for 2 years but the rate is way up about 7%.

Does that seem right to you?
I can leave it on the SVR at a much lower rate and save myself about £120p/m.
Would this be better or are rates likely to rise sharply enough that fixing now, even at the higher rate would be advisable?

Here's all my pertinent info:-
Existing lender: The Chelsea
Their SVR: 5.9 I think
LTV: 117500/160000=0.74ish
Payment type: Repayment (currently interest only)
No credit problems
Income: min £32500 PA plus frequent but unguaranteed bonuses

I really am confused now and would appreciate some advice.
I think I might be wise to stop the change going through until I get some advice from you guys, if only for my own peace of mind.

Thanks in advance...

yelf

BTLs will cost more because of the uncertainty on payment from a tenant. If you dont have a BTL but rent it out, you will be in breach of your mortgage agreement - when you apply you have to give details of anyone who will be living there and whether or not they will be named on the mortgage.

So in theory you dont have to use a BTL - but its not adviseable not to.

unite79

Rate quoted 7% fixed for 2 years - Ummm Seems VERY HIGH.

Trouble you have is Lenders SVR is currently high, so any increase will hurt straight away.

That said you should find a Whole of Market broker has access to fixed around 5.5% - So I would check another out!

Are you sure the person you saw has not got a small panel!

riqi

Someone said in this forum that if you rent it out but don't tell the lender it is considered fraud. Is it true? Can you then be prosecuted?
Cheers

yelf

riqi wrote: »

Someone said in this forum that if you rent it out but don't tell the lender it is considered fraud. Is it true? Can you then be prosecuted?
Cheers

probably - you sign to agree to the terms of the mortgage - and those terms will state that if you want to rent it out you must inform the lender.

bingibongi

So are you suggesting that you tell your lender you are no longer letting the property out in order that they will transfer you to a cheaper product ?

If you still let the property out this would be quite wrong wouldn't it.

The jailhouse can be a cold lonely place.

airchie

So I should just let it go to the SVR of The Chelsea while the rates are low and fix later?
Is there any mortgage advisors who could suggest a better rate on a fixed BTL mortgage that I could look into?

Thanks in advance.

RufusA

C&G seem to offer a 5.49% BTL fixed mortgage with 75% LTV (and hefty product fees). You'll need to check if this is any cheaper over the 3 years though with fees and remortgaging costs. I suspect it probably isn't!

HTH - Rufus.

Mithos

riqi wrote: »

Someone said in this forum that if you rent it out but don't tell the lender it is considered fraud. Is it true? Can you then be prosecuted?
Cheers

You'd only need a disgruntled tenant or neighbor to shop you to your mortgage company, and you'd be rumbled. I do believe the provider could insist you backdate BTL rate payments for the time you had been renting, or demand full payment of the mortgage and leave.

Other might say its a good way to save money, but you'd be playing games with the big boys who have legal contracts on their sides.