Mortgages and being financially penalised

mi33cupc@ke

Hi all,

As I have posted a while ago before, we sold our first house in 2007, which was on a residential mortgage with Northern Rock and was being let out as my husband is a serving member of the armed forces. When we went to buy another house we were told by Northern Rock that we were no longer entitled to a residential mortgage as we would be letting it out and they would only agree to give us a Buy to Let mortgage with a much higher rate of interest and charges i.e 6.59% fixed for 5 years as opposed to the 4% fixed deals that were also available at the time. We told them that although we would have to rent the house out, it would be our main residence and we intend to live there once my husband gets out, but they wouldn't hear of it. Anyway we took the deal thinking we had no choice.

I have since been trying to find out if there is a relevant law against doing this and today came across this: http://www.thisismoney.co.uk/mortgages-and-homes/mortgages-features/article.html?in_article_id=495207&in_page_id=58
Of particular note is comment number 3 at the bottom by Kevin Langshaw from Plymouth.

I know I am not the only one that this has happened to and wondering if anyone else has had any luck in getting interest back from their mortgage lender. According to this chap there is a relevant law against this. Does anyone know where I could find this so I can go to my lender armed with something more concrete?

Many thanks for any help or advice anyone can give!

Andy_L

Generally speaking (ie anecdotally & thus statistically suspect:-) ) if you are living in a house, and thus have a residential mortgage, companies allow you to rent it out and stay on a residential mortgage if you are posted.
However if you want to buy a house and then immediatly rent it out they apply the "duck test" and, since it looks like a BTL, walks like a BTL & quacks like a BTL they charge you a commercial mortgage.

Can you post a link to the law/comments by Kevin langshaw you refer to

mi33cupc@ke

Sorry, I meant to post it before, will edit the original now.

Andy_L

Would have been nice if he could have cited the actual law rather than mentioning a 20 year old DCI. My initial questions would be:
1. Does that mean the MoD/FCO are susposed to prevent them being financial penalised (eg make good any extra costs incurred) or that a private sector company can't charge them any more than a civillian in similiar circumstances.
2. Are people actually financially penalised (ie being out of pocket) by renting your house out on a BTL rather than residential rate? After all the rent charged should cover the costs.

herewegoagain2010

I think you'll struggle to get very far as you agreed to the T&C of the buy-to-let mortgage, when other lenders offer residental mortgages for forces people who rent the house. Cut your losses and have a shop around, I know the Halifax are very forces friendly.

babywillow

We got a mortgage with Abbey in Sept 2007, Posting order to Germany Nov 2007, spoke to them, they took a copy of posting order and then gave us written permission to let house with no BTL mortgage. Not sure what they are like as Santander but we live back in UK now and still let house :0)

samm1551

I have a mortgage with HSBC and all I needed to do was call them and say we were letting the house and why. They gave me written permission for the last 3 years without changing from a residential to a btl. My fixed rate comes to an end in August and they won't let me fix again, I have to stay on the SVR but it is lower than my fixed rate so I am not worried.

herewegoagain2010

The Halifax have just changed their terms for members of the armed forces and will now give up an unlimited term on a consent to lease with no charge. It's valid for as long as one the applicants is a serving member. Saves missing out on new products and gives you a lot more flexibility whilst serving.