Conversion from main residence to buy-to-let (BTL)

zas31

Hi, just curious, why is it that the lenders don't like finding out that the property is now let as opposed to being the main residence? Is it absolutely necessary to inform the lender? In genuine circumstances, if a person is relocated overseas and wants to let the property, would a remortgage be essential?

Many thanks.

GMS

A lender may grant consent to let meaning no need to remortgage.

A lender needs to be informed as there is a change to the terms of your mortgage if you are letting it. Insurances need to be different as standard insurance would not be valid.

If a lender refuses consent then you would need to look at changing to a Buy to Let mortgage. Consent to Let is often granted for a specified period so if it is long term a Buy to Let may be required eventually in any case.

Annisele

I think the reason might be that default rates on BTLs are higher than on residential mortgages.

Intuitively, it makes sense that people will try much harder to keep the roof over their own head than their tenant's roof.

powerwin

This is not professional advice but I would say it is absolutely essential to inform the lender you want to let out your property. It is likely to be specifically stated within your loan conditions that you must do this.

Rgds

Yorkie1

As previously stated, a buy to let property is a business proposition and presents a higher risk to the lender (risk of defaulting tenants, void periods, damage just for starters). Plus the insurance issue.

The lender lent the money on specific terms and conditions, one of which includes that it is the main residential home. A change to this breaches the mortgage T&C and could (although it hasn't happened often in the past, I believe) lead to the house being repossessed.

It has been suggested that in the future lenders will have access to wider databases to automatically pick up on changes of occupier, so the risk of being found out in that case would go up.