Renting out my flat - problems

zebedy

Hi,

I'm going travelling for 2007 and so plan to rent out my flat.
I've just had a meeting with my mortgage company (Halifax) and they have advised that they will have to move my mortgage from the fixed rate i am currently on to a Buy to Let mortgage which is ~£100 per month more expensive!
On top of this they insist that they will charge me a new product arrangement fee of £499 for doing this - I couldn't believe it, £499 for a little bit of paperwork.
With the more expensive mortgage payment plus the letting agency fees i will incur, I will actually make a loss each month as the rent won't cover it.

Any suggestions?

Doozergirl

Did you call them up and they made you go down to a branch? Or did you just go to the branch?

I've mostly heard that people make a phonecall and subsequently have a small amount added to their existing mortgage, not a brand new product. You're only travelling for a year and planning to move back in, I assume. I can't see how a brand new BTL mortgage is going to help. You'd have to take out yet another mortgage when you moved back

Sure someone with much better product knowledge will be along in a bit.

Noz

I'm a bit confused, the Halifax don't actually offer buy-to-let mortgages but consent to lease products that can be put in place for short-term leasing of the property as they don't offer commercial mortgages. These can only be arranged at local branches.

Is the 499 the arrangement for for agreeing a consent to lease and/or a new intrest rate product?

regularsaver1

The £499 fee is the product arrange ment fee for consent to lease. They reserve the right to transfer you to another rate. They will consent to let for 3 years, after that you must transfer to commercial terms. If you move back in within the 3 years, you come off the consent to lease product and then back to one in the range at that time.

There is a reason - how many people apply for residential and try to let. Many. So Halifax has changed their procedure as they do not do buy to let. their subsidary, Birmingham Midshires do. But they are a whole different lender so you would have remption penalties if you wanted to change to BTL. So £499 fee is not much in comparison.

You can only do consent to lease in the branch as you have to sign and the mortgage reviewer signs to give permission and changes your rate at the same time. It is then verbal that the permission is granted. The form is then sent internally to the business centre with a note from mortgage reviewer, to apply to consent to lease indicator to the mortgage.

When you sign the form - you agree to the rate and the fee.

I do consent to leases.

zebedy

Regularsaver1 has it right, that is what they said.

The thing that bothers me is that when I took out my mortgage with the Halifax (Jan 2006) they sent me a booklet with all the t&c's etc and i that it says the administrative charge for a consent to let is £75 and when I had my appointment at the local branch to obtain the consent to let they informed me that there is no longer a standard consent to let fee (of £75) but they charge a new product arrangement fee of £499 and the interest rate changes (resulting in the £100 higher monthly repayment)

I find it unbelievable that they charge £499 for this as i had been expecting £75.

They did also inform me that when I come back and move back into my flat that I can change back to a residential mortgage with any administrative or penalty charges.

I'm just really gutted that I'll actually be renting out my flat for a loss.

regularsaver1

They made this change in september 2005 (so a fair while)- so surprised by your T&C in Jan 06 - although it is always variable. Thed fee up until a few months ago was £199, but this has been the case since september 2005