Can HSBC force us to change to a BTL from a residential mortgage

welshgirly

Hi
Really need some advice on this one
we have a mortgage with HSBC on a very low rate tracker mortgage (we were very lucky!!). we have had to relocate as my husband got a new job to Cornwall. As we did not want to sell our property straight away til we knew we would settle here, we got permission to let for 1 year from HSBC. I am aware that this is what they say is the maximum of time they give consent. The rent JUST meets the mortgage and this has allowed us to buy a property here as we have now 1 year on decided that our jobs are pretty safe and we can stay. We have good tenants in the house which is management let with estate agents.
The problems are now as follows
1. The consent to let is going to run out next month.
2. We dont know how long it is going to take to sell and we think our tenants (as we would) will look to leave as soon as we put the house on the market
3. we would have to find payments for 2 mortages til it sold and we couldnt afford that.
4. The BTL rates at HSBC would mean that if they forced us to switch we wouldnt be able to afford to keep the property and the rent top up to pay mortgage will be to high.
So the main question is can HSBC force us to change to BTL and if so how?
really need some answers as we have to make a decision REALLY soon.
Cheers

Gorgeous_George

I think they can request that you switch to a BTL mortgage (perfectly reasonable request IMHO as the risks are clearly different with a BTL mortgage) . You can choose not to move to BTL but the residential mortgage may well need to be redeemed. You may not even qualify for a BTL mortgage if the rent doesn't comfortably cover the mnonthly mortgage costs.

Sometimes, it is better not to ask questions that you don't want the answer to.

GG

Senior_Paper_Monitor

Simple answer - yes they can, if you continue without permission they could advise you that you are in breach of general conditions and demand full/immediate repayment within the statutory notice period.

Whether they will is another question - my guess, but probably without the ultimate rush indicated above - particulalrly if you advise them you are selling (may take a while to get a suitable offer ) is they would eventually do so.

Go to whole of market broker to see what is available - unfortunately 'buy to lets' are not cheap at the moment (almost certainly considerably more than your current arrangements with HSBC) and absolute max of 75% LTV.

getmore4less

Your new residential mortgage will be at a higher rate anyway so why not port the existing loan, to keep that low rate, to the new purchase.

Then look for the best BTL option you can


The rent only neds to cover the Interest andcost not a full repayment mortgage.

Charterhouse

Yeah if I were you I'd sell the old house and port the old cheap mortgage to the new house. Why are you being greedy by trying to keep a BTL you can hardly afford? Here's a clue, if you can hardly afford it, it isn't a good investment.

happybroker

have you considered asking your tenant if they woudl like to buy it from you?

Let_Us_See

Please note it is not possible to port (transfer) a mortgage to a property you ALREADY own.

Charterhouse

Let_Us_See wrote: »

Please note it is not possible to port (transfer) a mortgage to a property you ALREADY own.

They didn't say if they'd bought the home in Cornwall already. I'm assuming they haven't yet bought that.

Gorgeous_George

Charterhouse wrote: »

Yeah if I were you I'd sell the old house and port the old cheap mortgage to the new house. Why are you being greedy by trying to keep a BTL you can hardly afford? Here's a clue, if you can hardly afford it, it isn't a good investment.

That is rather rude and not relevant to the OP's question.

There are many reasons why people BTL. Reading between the lines, the OP would like to sell but doesn't know how to cope with the potential void. This could be managed in a number of ways.

Selling to the current tenant is an excellent idea - if thetenant wants to buy a house and more particularly, wants to buy that house.

The OP could auction the house. This minimises the void period but could reduce the purchase price.

Finding a buyer with tenants present can be difficult. The tenants may not allow viewings regardless of what they agreed to in the tenancy agreement. An awkward tenant could delay the sale and a buyer may be concerned that vacant possession is dependant on the tenant moving out.

The OP could continue renting the property for the foreseeable future. This requires consent to let to continnue or a BTL mortgage and may not be profitable and includes a lot of risk.

Selling and porting the cheap mortgage could be an option but any ERCs and arrangement fees may make it unaffordable.#

GG

Gorgeous_George

Charterhouse wrote: »

They didn't say if they'd bought the home in Cornwall already. I'm assuming they haven't yet bought that.

In Post #1 the OP says that they bought a house in Cornwall and that they may need to find 2 mortgages if their tenant leaves when the house is marketed.

GG

Charterhouse

Gorgeous_George wrote: »

In Post #1 the OP says that they bought a house in Cornwall and that they may need to find 2 mortgages if their tenant leaves when the house is marketed.

GG

Sorry, my bad, I missed that. I am honestly very surprised at that decision. The reality is that the OP is overleveraged and things are about to get very messy. The time to ask for advice was a year ago.

In my opinion to try and actually be constructive I would explain the situation to HSBC (are HSBC aware of the second mortgage on the new house?) and see if they will give you permission to stay on the residential mortgage for another year, provided that you try to sell the BTL house. I think otherwise the overleverage is going to start eating into your savings and there is simply not a lot of point in being long property if it is costing you money every month to do it.