Went back on to SVR, then started sub-letting, then lost my job!

stefanoeast

Haven't managed to find anything very similar to this on other posts, so here goes:

Bought a flat two years ago for £154,000 with a 2-year fixed-rate Halifax mortgage of £105,000 (I put down a deposit of £49,000).

That ran out in July this year but because of falling house prices affecting my Loan-to-Value (LTV went over 75% as flat was valued by Halifax in May at £135,000) ratio, my mortgage advisor wasn't able to find a bank willing to lend.

On top of that I moved in with my girlfriend and let out the flat to pursue my career in music on lower costs! I've just told Halifax about this and they've arranged an appointment to discuss this. Obviously, the call-centre woman said I needed their permission for this. They'll be wanting to put me on a buy-to-let (BTL) mortgage because of the extra risk I presume.

And then I was made redundant! Working freelance now and there's plenty of it, but I've no secure income for potential lenders to judge risk on.

WHAT SHOULD I DO? I couldn't get a mortgage before I was made redundant! What will Halifax offer me? I'm on SVR anyway. Will they try to add a percent or three because of the added risk of me letting? Or can I bargain with them.

I'm making overpayments with my savings and redundancy package, as Martin recommends, to bring down my mortgage and LTV ratio, but what should I tell the Halifax guy when I see him in two weeks?

I'm a musician and really want to focus on my studies and just get by really. The tenent is lovely and I'm being a good landlord so no problems there.

Any suggestions would be much appreciated. And sorry for the long post! _pale_

Mrs_Bumble

You don't have too many choices do you, with no secure employment you are not going to get a mortgage elsewhere.

You do need Halifax permission to let the property and so you will have to ask them and see what they say.

What is your intention for the flat?

This tenant maybe ok but what about the next one, are you going to be in a position to maintain the mortgage if the tenant is difficult and doesn't pay? Are you going to have the funds to take them to court and evict them?

You can check the approximate value of the flat at sites like https://www.zoopla.co.uk

If you want the carefree musician life why not just sell?

stefanoeast

Thanks for your advice, Mrs Bumble!

I will tell them what I'm doing, but it's not a buy-to let in my view. I bought it to live in and did happily for two years. And I'd like to live there again. But for the next year or two I'd like to save money and live with my girlfriend while I go through college.

Zoopla estimates my property at £145,000, which I'd go with. ie only worth £9,000 less than when I bought it. I could probably sell in a couple of years and break even while freeing up the money!

My big question is: will they force me to get a Buy-To-Let mortgage? Or add one per cent to the SVR available to me to cover their risk? (as I think I've seen in another thread here)

Thanks for any advice you have. I can offer any on singing in return (don't suppose that's much help on this site though!)
Steve

Mrs_Bumble

They may allow you to let with out putting you onto a buy to let product, but technically now you are a landlord and letting the property out. Lenders may give temporary permission to let out whilst your circumstances change temporarily for instance suddenly forced to work different part of the country but what you are doing isn't that??

Don't forget as well that you will need to notify the inland revenue and declare any income from the letting of the property.

NeilB

A useful link here regarding what some banks do in this situation;
http://www.lovemoney.com/news/mortgages/need-to-move-but-cant-sell-dont-panic-3762.aspx