Consent to Let

sshaw101

Hi all,

we are looking at rent out our property and in order to do this we need a consent to let from Northern Rock. Reading the info on this they say that we need a LTV of 70% or more. We dont have this, does this mean we will not be able to rent out our property?

We are buying another property which will have this (due to putting down 35% deposit) so could they take this into account?

Also they say we need to cover the interest of the mortgage by 120%, similar houses to ours are on the market for £750, interest only is £725, therefore achieving 120% would make our house too expensive.

Do you think NR consider each case on its own merits or will they decline this consent to let?

BitterAndTwisted

Why are you considering paying mortgages on two properties rather than just selling the one you own now?

sshaw101

BitterAndTwisted wrote: »

Why are you considering paying mortgages on two properties rather than just selling the one you own now?

We are still in a fixed mortgage on our current house - so by moving it will cost us 4k in fees. If we can not get the consent to let then we will just have to sell and incur these fees (unless anyone knows of a cunning plan to sweet talk NR into not paying them).

Also our house will sell for the same as we brought it for but if we can keep hold of it for 5-10 years it will have gone up in price by then and we can then sell.

BitterAndTwisted

But from what you've described the rent won't pay the mortgage interest so long-term it could cost you more than the redemption charges, specially if you get a bad tenant who stops paying the rent, trashes the place and it takes you six months to evict them.

Being a professional landlord is not a sensible route for the inexperienced.

sshaw101

it is a risk re bad tenants but id s risk I woudl be willing to take. Besides i woudl imagine renting ours to a young family or couple (may even have some friends of ours who are interested)

the mortgage will be covered by the rent (mortgage is 725 and rent will be 750)

sinbad182

BitterAndTwisted wrote: »

Being a professional landlord is not a sensible route for the inexperienced.

Its also not exactly managing a space shuttle launch !!!!!!!

Are people born experienced landlords on here?

CloudCuckooLand

Why not put 25% into the new place and put the other 10% into improving the LTV of the old place? It doesn't seem equitable that you have this big deposit available, but you expect NR to carry the risk...

If the LTV was ok, they might be more willing to be flexible on the rent %. Side effect of putting money into the old place, would be to reduce the mortgage repayments which would alter the rent vs mortgage calculation.

Missing both of the criteria is going to make it easier for their computer to say "no".

Although the only sure way to know is to ask them.

silvercar

sshaw101 wrote: »

We are still in a fixed mortgage on our current house - so by moving it will cost us 4k in fees. If we can not get the consent to let then we will just have to sell and incur these fees (unless anyone knows of a cunning plan to sweet talk NR into not paying them).

Also our house will sell for the same as we brought it for but if we can keep hold of it for 5-10 years it will have gone up in price by then and we can then sell.

One "cunning plan" may be to transfer the existing mortgage to the new property and then take a mortgage with no early redemption penalties on the old place.

Before BTL became trendy, people in your position would get a bridging loan while they sold the first property. In my mind that is less hassle than becoming a landlord and being responsible for the maintenance of two properties.

sshaw101

silvercar wrote: »

One "cunning plan" may be to transfer the existing mortgage to the new property and then take a mortgage with no early redemption penalties on the old place.

Before BTL became trendy, people in your position would get a bridging loan while they sold the first property. In my mind that is less hassle than becoming a landlord and being responsible for the maintenance of two properties.

Already tried that route but because our current mortgage is with the old northern rock they will not transfer it over to the new northern rock!

Yorkie1

sshaw101 wrote: »

it is a risk re bad tenants but id s risk I woudl be willing to take. Besides i woudl imagine renting ours to a young family or couple (may even have some friends of ours who are interested)

the mortgage will be covered by the rent (mortgage is 725 and rent will be 750)

Given the number of threads we see on here, it's impossible to guarantee a problem-free rental by hand-picking tenants (even family, let alone friends).

Also, £25 per month sounds a very tight margin. What about tenant checks, LL's insurance, gas safety checks, electrical checks if you have them done, unexpected repairs, interest rate rises?

tbs624

sshaw101 wrote: »

it is a risk re bad tenants but id s risk I woudl be willing to take. Besides i woudl imagine renting ours to a young family or couple (may even have some friends of ours who are interested)

Any category of T can end up causing you grief and you have to factor in whether you could afford to cover the costs of your rental property with a non-paying T in situ for a few months. People lose their jobs, get ill and so on. Don't let to friends unless you are prepared to (a) vet them as you would any other potential T and (b) evict them if they breach the tenancy agreement

sshaw101 wrote: »

ithe mortgage will be covered by the rent (mortgage is 725 and rent will be 750)

For income tax purposes you can only set down the interest portion of your mortgage repayments.

Do you have a contingency fund for repairs and maintenance?

Have you budgeted for an EPC, Gas safety cert, electrical safety checks, LL insurance and so on?