nationwide mortgage & want to start renting

welshman01

We currently have a nationwide mortgage and we’re on the BMR @ 2% above base. We've moved out of the house and as we are struggling to sell we’ve decided to rent the house out.
I understand that I need to tell Nationwide that I intend to rent the house out, but by doing this will they then take me off the BMR of 2% above base (if so does anyone know what they will change it too)? Could I just continue without telling them? What are the implications and how risky would that be.

Thanks in advanced

jennfercain

I am on the same Nationwide rate and was looking into this some time ago (however I did not end up renting the house out as a job transfer fell through).

As far as I'm aware you will be kept on the same rate, you are not borrowing anymore, getting a second mortgage or changing your term/repayments.

Unless their policy has changed you just need to make them aware. You're not doing it for profit so it shouldn't change anything. But make sure you tell them.

hope this is right!

welshman01

...this is what I thought. Would like this clarified before I call them and put my foot in it though

incher

If I were you, I'd just phone up and ask them what they would do if you decided to rent your house out. It is after all just a query at this stage, and you're not committing yourself at all.

bingobangobongo

I am looking to do this myself - and if they agree with the consent to let, I think they add an extra 1.5% on to your interest rate (even if your on the BMR). I think this comes into effect 6 months after the house has been rented.

Seems ridiculous as if they added this on to my mortgage ten the mortgage cost would be more than the rent we could charge (plus landlord insurance and other extras) - would make renting not viable.

Please let me know how you get on - if you decide to ring them or call into a branch.

Thrugelmir

bingobangobongo wrote: »

I think they add an extra 1.5% on to your interest rate (even if your on the BMR).

Correct.

Unless renting out is a viable profitable then not a course of action to be recommended.

welshman01

Hi,
Yeah you guy's were correct, I've just come off the phone with Nationwide. My BMR would increase by 1.5% so 3.5% above base in total.

So as it stands it's viable to rent but should the base rate increase by 2% to 2.5%, we would be £50-100 out of pocket each month. I need to weigh this up against paying the full mortgage amount on an empty house that's not selling.

Any thoughts?

welshman01

...sorry forgot to add. This would kick in after 6months and would be reviewed in 3 years time. If I was to move back into the house, the rate would drop back to the 2% above.

Thrugelmir

Also you need to weigh up the possibilty that the overall property market will fall.

Letting out property incurs additional costs. So your £50 -£100 won't go far. For instance if the property was to require major maintenance expenditure or your tenant defaulted on paying the rent.

Sometimes better to cut your lossess.

welshman01

very true. I am trying to cut my losses but with no luck

House is defo priced to sell!! But still no interest.

themull1

you would need landlord insurance as well, which might be more than normal insurance.