Mortgage Providers Consent to Let

geomurph

Hi,

I am moving abroad and am going to be renting my flat. I called my mortgage provider, the Halifax, to let them know and they arranged an appointment with an advisor who advised me that I would have to move to a new mortgage.

As far as I can make out he called it a 'consent to let' mortgage but was otherwise the same as I had just now, and if I chose a fixed rate repayment product like I have just now my rate would increase from 5.3% to 5.9%. Also £500 arrangement fee and tied in for 3 years with early repayment charges of 1%.

Is this normal that you have to change your mortgage when you rent your property even if only for a year or two?

I didn't really trust the guy as he kept pushing the mortgage indemnity insurance no matter how many times I said no.

Many thanks

Geomurph

toonfish

Normally they will consent for you to let the property whilst you are trying to sell it, without needing to change products. Obviously the flat could take a long time to sell.

In addition though what "mortgage indemnity" insurance was he trying to sell you?

silvercar

Some lenders will allow you to lease without changing product, particularly if it is for a short time. Could you put the request in writing to by pass their advisor.

Even though he is part of the Halifax, I am guessing he has sales targets to meet even if not on commission.

UK007BullDog

There is this new landlord mortgage protection insurance that pays out if a tenant defaults or leaves without giving notice. Was it something like that they offered?

Ivrytwr3

If it is only for a few years you want to let the property there is no need to cchange mortgage. Telephone your mortgage helpline and explain what is happening and request a consent to let (normally an admin fee, approx £100 - £200 and is only for approx 3 years).

If they say yes, great, if not, if you want to stay within your mortgage t&c you will either have to switch mortgages or go elsewhere to obtain a buy to let.

Noz

The Halifax would appear to operate differently, to agree to give permission for the property to be rented - the mortgage must be moved onto a specific consent to lease product

Ivrytwr3

Can I lease/rent out my house to somebody else?
You'll need to see one of our Mortgage Reviewers to discuss this as it is subject to our agreement. Upon completion of a 'Consent to Lease' form, we'll then tell you if we agree to the proposed letting and what our requirements are.

For further details call 08456 03 03 52. Lines are open 8am to 8pm Monday to Friday, and 9am to 4pm on Saturdays.

Alternatively you can request a callback.

Straight from Halifax FAQ. So it appears they can, i genuinally think that the guy was just trying to earn a commission from the OP and not giving the best advice. I would go direct to the companies mortgage call centre instead of speaking to someone in branch.

UK007BullDog

BTL mortgages are currently higher than residential mortgages with each lender. They are banking on the fact that you are investing your money on a property and hope to make a profit. So they want a slice of the action.

That is why comparing different BTL lenders is prudent. Some non-high street lenders are more competitive than the high street lenders.

djm1972

Skipton charge £100 administration fee per tenant and 0.5% loading on your interest rate (up to 80% LTV, otherwise 1%) - but no need to change your mortgage.

MarkyMarkD

It's up to each lender how they treat this circumstance.

At the end of the day, your original mortgage is a residential mortgage which doesn't grant you the right to let the property. If the lender wants to levy a charge for consent to let, they can charge you whatever they like; if they want to tell you that you cannot let at all under the terms of your mortgage, they can do that. If they want to force you to switch products to a specific BTL product (as Halifax seem to) they can do that as well.

It's a factor in comparing different lenders which most people don't consider when they take out a mortgage - because they normally don't expect to end up letting out the property.

silvercar

MarkyMarkD wrote:

It's up to each lender how they treat this circumstance.

At the end of the day, your original mortgage is a residential mortgage which doesn't grant you the right to let the property. If the lender wants to levy a charge for consent to let, they can charge you whatever they like; if they want to tell you that you cannot let at all under the terms of your mortgage, they can do that. If they want to force you to switch products to a specific BTL product (as Halifax seem to) they can do that as well.

It's a factor in comparing different lenders which most people don't consider when they take out a mortgage - because they normally don't expect to end up letting out the property.

Doesn't really encourage honesty does it?