Consent to let/buy to let

80schild

Although the plan at the moment is selling to a cash buyer who can proceed quickly, I am just weighing up other options should this sale fall through. As we are only selling for this low price on condition we get our purchase property but if this fell through we would rent the house out and go for a different house (or rent somewhere ourselves if we couldn't find one to buy)

What is the difference between consent to let/Buy to let remortgage on own house? I'm assuming consent to let is permission from your lender to rent the house out and BTL would be remortgaging with a new BTL mortgage.
Which is the better option? Have about 30k equity in the house.
If we chose consent to let rather than remortgage does this mean we can still get another mortgage on a resisdential purchase?

00ec25

consent to let
- is at the discretion of your current provider. they may refuse and you may not be told why.
- If they agree they will charge a fee, recent posts have shown that, depending on lenders, this could be as high as several £1,000.
- Consent to let typically (but not always) has a time limit on it. At the end of the period you may be allowed to reapply or they may refuse you permission to continue renting it out. If the latter you are stuck - think about it this way: you bought on a residental mortgage not a BTL mortgage so why should they allow you to get in the (cheaper) backdoor to being a LL

BTL
- interest rates are higher
- deposit required typically at least 25%
- loan value less based on your circumstances as typically they will require the monthly rental value to be at least 125% of the mortgage repayment

The time limit is often the main decider on which format you need. " years consent to let soon goes if you acceopt house prices will not recover significantly for sometime yet

BTW plenty of posts on here about people letting out without telling their mortgage company. The exact legal consequences of doing so have not yet been confirmed in court, if you cheat you may become the test case - your choice/risk!

You can get another residential motrtgage with a consent to let one in place

80schild

00ec25 wrote: »

consent to let
- is at the discretion of your current provider. they may refuse and you may not be told why.
- If they agree they will charge a fee, recent posts have shown that, depending on lenders, this could be as high as several £1,000.
- Consent to let typically (but not always) has a time limit on it. At the end of the period you may be allowed to reapply or they may refuse you permission to continue renting it out. If the latter you are stuck - think about it this way: you bought on a residental mortgage not a BTL mortgage so why should they allow you to get in the (cheaper) backdoor to being a LL

BTL
- interest rates are higher
- deposit required typically at least 25%
- loan value less based on your circumstances as typically they will require the monthly rental value to be at least 125% of the mortgage repayment

The time limit is often the main decider on which format you need. " years consent to let soon goes if you acceopt house prices will not recover significantly for sometime yet

BTW plenty of posts on here about people letting out without telling their mortgage company. The exact legal consequences of doing so have not yet been confirmed in court, if you cheat you may become the test case - your choice/risk!

You can get another residential motrtgage with a consent to let one in place

Thanks-that explains it well! I have spoke to my provider which is NRAM and they said they will sent me an application pack and the fee is £100! I have recently paid about 32k off the mortgage balance to bring us into positive equity-am wondering if my monthly repayments will go down?

There is no way I would take the risk of letting it out without telling the mortgage company and in anycase as we are getting a mortgage to buy a new property we need the consent to let/ BTL

zougathefist

80s Child

I am also with NRAM and the £100 charge only provides CTL for 1 year from the day you let the property, the unlimited charge is/was around £260, in the ling term it is better to get this unless you can guarantee that you will only be letting for a year.

The unlimited also allows you to let, then not let then after a period, to re-letthe property without seeking further permission.

G_M

80schild wrote: »

Thanks-that explains it well! I have spoke to my provider which is NRAM and they said they will sent me an application pack and the fee is £100! I have recently paid about 32k off the mortgage balance to bring us into positive equity-am wondering if my monthly repayments will go down?

There is no way I would take the risk of letting it out without telling the mortgage company and in anycase as we are getting a mortgage to buy a new property we need the consent to let/ BTL

Paying off part of the mortgage means either your repayments will drop, or you could continue to pay the original monthly amount (or something in between) which eans you'd pay off the mortgage early (after say 18 years instead of 25). You would pay a lot less interest over the life of the mortgage this way.

Getting a new domestic mortgage might be more problematic if you have an existing domestic mortgage, albeit with CTL. Having a BTL would separate the two. I would discuss the options with an independant mortgage advisor.

80schild

G_M wrote: »

Getting a new domestic mortgage might be more problematic if you have an existing domestic mortgage, albeit with CTL. Having a BTL would separate the two. I would discuss the options with an independant mortgage advisor.

I have been trying to get hold of our mortgage broker (who suggested BTL to usin the first place) for a week now to discuss this but she is always unavailable!

emmasponge

I am also with Nram and I have a together mortgage which consists of £88k mortgage and £27k unsecured loan. My house is currently on the market for £106,995 and I am thinking rather than sell to rent out and swap my mortgage to a BTL to reduce my monthly payments which means I can then cover the mortgage and the loan with the rent I receive. Do Nram offer a service which means they will swap my mortgage over to a BTL??

Thrugelmir

emmasponge wrote: »

Do Nram offer a service which means they will swap my mortgage over to a BTL??

NRAM do not offer any new lending products.

mrchiggles

G_M wrote: »

Paying off part of the mortgage means either your repayments will drop, or you could continue to pay the original monthly amount (or something in between) which eans you'd pay off the mortgage early (after say 18 years instead of 25). You would pay a lot less interest over the life of the mortgage this way.

Getting a new domestic mortgage might be more problematic if you have an existing domestic mortgage, albeit with CTL. Having a BTL would separate the two. I would discuss the options with an independant mortgage advisor.

I've had 2 new mortgages with an existing residential mortgage on the go.

The key (I'm told) is that if it's not an official BTL with all the paperwork in place and contracts from the tenant, etc then they will count the outgoing for the mortgage as an outgoing like any other when they do the affordability calcs.

Mine is only a small flat with a £250 a month payment so has caused me no problems at all but I guess if you had a big mortgage and a low salary then the new mortgage might not be seen as affordable.

BitterAndTwisted

emmasponge wrote: »

I am also with Nram and I have a together mortgage which consists of £88k mortgage and £27k unsecured loan. My house is currently on the market for £106,995 and I am thinking rather than sell to rent out and swap my mortgage to a BTL to reduce my monthly payments which means I can then cover the mortgage and the loan with the rent I receive. Do Nram offer a service which means they will swap my mortgage over to a BTL??

Even if your lender did have a BTL product you probably wouldn't get a BTL mortgage in any case. The majority of lenders insist that you have 25% of equity in the property plus the anticipated rent be 125% of the monthly mortgage payments.

Even if you manage to sell your property at the full asking-price you're going to be carrying EIGHT GRAND"S WORTH of negative equity plus selling and moving costs as an unsecured loan and have to be able afford another home to live in on top. That's not making any sense to me but maybe it is to you......

deltasierra29

Hi, I would suggest still with consent to let if you can even if it is just for X amount of time doing a new BTL morgage is unlikely to be the most cost effective way of doing it as..

If you got a cash buyer again in say 6 months, you'd have to pay back the original BTL loan amount plus the BTL mortgage fee (these can be quite high, sometimes a % of the loan) plus more than likely an early repayment charge too as very few BTL mortgages dont have any!! Unless you are planning to be a landlord for 2 yrs+ id say go down the consent to lete route.

fees are high on BTLs - as long as your existing property is considered 'self financing' by the new lender on the new house you are fine, this varies from lender to lender.

one big high st lender for example, for them to consider an existing property being rented out to be self financing, the rental must be the higher of 125% of the current monthly mortgage payment OR 125% of outstanding mortgage balance at 6% whichever is higher. A real stumbling block for those with not a lot of equity or a relatively high mortgage.

whereas someone like a building society may just want 125% of mortgage payments subject to evidence of estimated rental income and consent to let confirmation.

If 'self financing' then the property will be ignored during all assessment of your potential lending on the new house, if not then yes some lenders will then treat the whole monthly mortgage payment as a commitment and ignore the rental income or some will just treat the deficit as a commitment.