Anyone appealed against 1% interest rate increase for converting to btl mortgage?

moneyangel22

Hi Everyone,

I have 2 properties which I once lived in but then moved out. With the market being what it is it didnt make sense for me to sell them so i rented them out one after the other. My mortgage lenders were fine about it but added 1% to my interest rate for the privelege!

As they both did it I thought it was industry standard but I have just spoken to a mortgage advisor for advise on something else and mentioned it to him and he said that it was harsh of them to do it and not the norm at all.

What I am wondering is if I could appeal against it? Has anyone ever tried it?

Thanks

_Andy_

If that's their policy there is nothing to appeal against. Just because other lenders may be different isn't relevant.

Trollfever

BTL mortgages attract a risk premuim over owner occupied mortgages.

MarkyMarkD

moneyangel22 wrote: »

As they both did it I thought it was industry standard but I have just spoken to a mortgage advisor for advise on something else and mentioned it to him and he said that it was harsh of them to do it and not the norm at all.

Your mortgage adviser is an idiot.

You borrowed in the first place to buy a home to live in. That is all you are allowed to do with it, under your existing mortgage contract and it is a breach of the covenants with the lender to let it out, without consent.

It is up to each lender what approach they take to letting of properties with residential mortgages. There are many different answers:

- charge you nothing at all (very unlikely);
- charge you an annual, or less frequent in some cases, fee and leave the rate the same (not that uncommon, but not necessarily the majority);
- charge a premium on the product rate, either with or without a fee (very common indeed); or
- require you to redeem your existing product - and pay any early repayment charges if applicable - and apply for a buy-to-let mortgage along with the fees and higher rate that involves (not particularly common, but also not as rare as you might think).

The "1% on top" approach is not harsh at all, particularly if your product rate is very competitive. The last approach mentioned above could cost many thousands of pounds in extra interest over a couple of years. 1% on top will not.