Interest rate increase for renting property

MLD_2

I bought my house in 2008 with a 5 year fixed rate mortgage from Nationwide. I changed job a year later and moved from the area. I put the house on the market but because of the credit crunch there was very little interest. After 2 years of the property sitting empty and only a few viewings I decided to let it and got permission from Nationwide to do so. I am now 6 months into the rental and Nationwide contacted me and said that they will be increasing my interest rate by 1.5%. I've checked the small print of my mortgage and sure enough it says that if I let the property they will increase the interest rate by this amount after 6 months of rental.

My questions are these: What is the justification for increasing the interest rate? Is there any legitimate basis for protesting against this increase (whilst recognising that I am at fault for not reading the small print at the time of taking up the mortgage offer because I had no plan to let the property then)?

Any advice greatfully received.

Thanks

Annisele

One of the reasons is that buy to lets are a higher risk for the lender. Some people will move heaven and earth to keep the roof over their own head - but they're (understandably) not quite as desperate to keep the roof over their tenants' heads.

I don't think you have any justification for protesting. The terms of the mortgage originally were that it was a residential mortgage - Nationwide didn't have to give you permission to let at all. You might be better off going to a new lender on a BTL basis, but then again you might not - you should check the figures.

powerwin

MLD wrote: »

My questions are these: What is the justification for increasing the interest rate? Is there any legitimate basis for protesting against this increase (whilst recognising that I am at fault for not reading the small print at the time of taking up the mortgage offer because I had no plan to let the property then)?

Typically the interest rate will be increased when a mortgage goes from residential to Buy To Let, as it is then more risky for the lender. This is industry practice.

I don't see that you have any case for complaint as it's there in the mortgage terms and conditions.

The only thing you could do is look at other mortgage providers.

Rgds