Intention to have a lodger causing problems

diethyl_ether

I've looked into the govt's Rent a Room scheme* and it seems like what I'm after. My partner and I have a LTV around the 50% mark and want to have a lodger to help pay off the mortgage faster.

I was initially very much liking First Direct's BRT offset mortgage and started the application process, but I just called to ask about something unrelated and happened to mention my intention to have a lodger. The woman on the phone said it would be a breach of contract with them.

I looked at this year-old thread** and given the comments there, my situation seems a lot better, and FD seem to be extremely anal about this. It's occurred to me that I could just get the mortgage, get a lodger (who is actually a friend of ours) and just not tell FD anything.

How dangerous is that? Has anyone done anything similar?

__________________________________________
* direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804
** forums.moneysavingexpert.com/showthread.html?t=1336253

VIGILANT22

Quote: The woman on the phone said it would be a breach of contract with them.

diethyl_ether

I suppose that makes my original post look pretty stupid. I'm a cautious sort of person so I'm not really considering it, I'm just interested in whether this sort of thing is common and whether anyone has any prior experience with a situation like mine (small LTV, two joint owners and wanting a lodger).

emmadragon

There is no real reason to tell them, I have had lodgers for years now and at no point has my mortgage company asked anything. I make sure I have a contract with the lodger and that they have their own insurance and so long as the mortgage company gets their money I am sure they won't mind.

Go for it and I'd recommend www.spareroom.com as a great place to find someone, I realise you have a friend lined up but as a word of advice from experiance I wouldn't advise renting to a friend.

Good luck!

Edited to add: I have a 90% mortgage with my dad!

Conrad

C&G from memory accept lodgers.

Emmadragon - have you told your buildings insurance co? If the place burned down and lodger died you could be liable for millions (thier loved ones claiming damages etc) if they aren't covered - just in case you might not be aware.

When you inform the insurers they in turn might tell the lender though.

emmadragon

Blimey! Nothing like the extreme but I stipulate in the contract that they must get their own insurance and my insurance company advised the same.

If the place burnt down with them inside (heaven forbid) then I would have to claim on my buildings insurance if they tried to come after me as since they are only a lodger then they only insure the contents on their room and not the bricks and motar around their room.

Please don't let extreme situations put you off, if you look at that website you will see that hundreds of people rent a room in their house exactly for government 'rent a room' scheme. Just make sure you get the wording of your contract right, remember things like responsibility for keys if someone looses theirs and as a couple you may want to have alone time so you could say the living room is off limits after 9pm for instance.

Good luck!

VIGILANT22

emmadragon wrote: »

Blimey! Nothing like the extreme but I stipulate in the contract that they must get their own insurance and my insurance company advised the same.

If the place burnt down with them inside (heaven forbid) then I would have to claim on my buildings insurance if they tried to come after me as since they are only a lodger then they only insure the contents on their room and not the bricks and motar around their room.

Please don't let extreme situations put you off, if you look at that website you will see that hundreds of people rent a room in their house exactly for government 'rent a room' scheme. Just make sure you get the wording of your contract right, remember things like responsibility for keys if someone looses theirs and as a couple you may want to have alone time so you could say the living room is off limits after 9pm for instance.

Good luck!

You are completely out of order encouraging someone to go against what their lender has advised...are you forgetting the lender has the legal charge on the house and can stipulate what is accepatable and what is not

emmadragon

Excuse me but I am stating that there is no need to tell them, I am not advising the to go AGAINST their wishes but mortgage lenders are finding any excuse these days not to lend and having a lodger is NO reason not to let you have a mortgage! In fact it means that they are more likely to be able to pay! But unfortunatly it is the BANKS in this country that are putting up stupid "rules" as to why they can't lend to certain people.

Why would our government advertise a rent a room scheme and activly promote it on line if it was against mortgage rules?

Do you have or have ever had a lodger?

VIGILANT22

Who makes the rules YOU.....or the organisation lending the money.
If the OP was told by her lender this was a breach of contract you have no damned right to go against her lender.
A breach can result in a loan being called in.

emmadragon

Yea, ok, a breach of contract would not be good.

HOWEVER as the OP said, they believe that First Direct are being "anal " about this and I am stating that I am inclined to believe this. Also we do not know who this "woman on the phone" is and she may not be qualified to confirm that this is FD's policy. Of course reading the T&C's would be the only way you can be sure. I apologise to the OP and I would suggest you get a copy of FD's T&C's and check through them. However if they do believe having a lodger would be a "breach of contract" then I would avoid them for my mortgage, what do they care as long as they get their money?

I have spoken to a lot of people about this, including mortgage advisors, friends who work in banks and also the government helpline and they all said that it was up to me if I wanted to inform the mortgage company but they saw no reason for me to mention it. At the end of the day, all the mortgage company cares about is if you pay!!!

VIGILANT22 - I think you need to take a step back and give some people a bit of credit, if it is going to be a breach of contract I am sure they wouldn't do it. By the way, you didn't mention if you have any experiance in this matter?

VIGILANT22

emmadragon wrote: »

Yea, ok, a breach of contract would not be good.

HOWEVER as the OP said, they believe that First Direct are being "anal " about this and I am stating that I am inclined to believe this. Also we do not know who this "woman on the phone" is and she may not be qualified to confirm that this is FD's policy. Of course reading the T&C's would be the only way you can be sure. I apologise to the OP and I would suggest you get a copy of FD's T&C's and check through them. However if they do believe having a lodger would be a "breach of contract" then I would avoid them for my mortgage, what do they care as long as they get their money?

I have spoken to a lot of people about this, including mortgage advisors, friends who work in banks and also the government helpline and they all said that it was up to me if I wanted to inform the mortgage company but they saw no reason for me to mention it. At the end of the day, all the mortgage company cares about is if you pay!!!

VIGILANT22 - I think you need to take a step back and give some people a bit of credit, if it is going to be a breach of contract I am sure they wouldn't do it. By the way, you didn't mention if you have any experiance in this matter?

Regardless of whether people think something is anal or not, it doesn't change the legality of matters.
Who do you think the woman on the phone was!?...a cleaner who was just passing by and decided to answer the phone!!

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

"If you're a mortgage payer it's best to check whether taking in a lodger is within your mortgage lender's and insurer's terms and conditions"

You are very badly informed.....another example of a bloke down the pub said....rolls eyes.....