Consent to let and renting out

itgirlinuk

I bank with Halifax and I have 5% of my original mortgage amount left to repay.

We decided to let it out and spoke to Halifax to get a conset-to-let. They sent me paperwork to fill and send back...which we did. 2 months went by (and we were collecting rent at this time) and Halifax said I had not signed and sent everything back...So I started the conversation all over again with them and also told them I wanted to find another BTL mortgage on better terms. Due to other conflicting and complicated reasons we didnt go ahead with the BTL mortgage.

When I talked to Halifax again, they said that they CANNOT force me to take the product they are offering under the consent-to-let and I can choose to stay on the existing mortgage. But they will levy a 1% penalty for the rest of the mortgage and will send out letters which I can happily ignore. They said it does not affect the terms of the mortgage as they have levied a penalty and my landlord's insurance should not affected by this (they did ask me to check with the insurance company).

So, I am now very confused!

1. Can I get away with just a 1% penalty :j (which is not much considering my residential mortgage rate) or should I be very worried about the advice they are giving me??

2. Will Halifax decide to sue me at a later date?

3. I will talk to my insurance agency, but will this be frowned upon?

Please help :A ...i dont want to be in mortgage trouble..

kingstreet

So you have a "choice" of a product from Halifax or a 1% penalty if you don't take that and have given up on a move to another lender?

What's the product being offered?

theartfullodger

As it's only 5% pay that back and tell them to f*** off - then maybe remortgage on a BTL mortgage & spend the money (70% LTV) on new car/new boat/world cruise/mistress/toy-boy (or all of them..).

And mortgage expense is allowable against tax so you reduce YOUR tax bill at OUR expense...

Come on, live a little!!


Cheers!

itgirlinuk

kingstreet wrote: »

So you have a "choice" of a product from Halifax or a 1% penalty if you don't take that and have given up on a move to another lender? What's the product being offered?

The product they are offering is a "consent-to-let" product at 5.65% while the 1% penalty will bring it the total rate to 2.65%

I dont want to remortgage now as we want to do this flat and the new home at the same time sometime next year. That's why the BTL is no go as its too much effort for very little tax gain.

itgirlinuk

theartfullodger wrote: »

As it's only 5% pay that back and tell them to f*** off

Sorry...I got the calcs wrong!! Its 19% I have to pay back and I dont have that kind of money at the moment.

kingstreet

itgirlinuk wrote: »

The product they are offering is a "consent-to-let" product at 5.65% while the 1% penalty will bring it the total rate to 2.65%

I dont want to remortgage now as we want to do this flat and the new home at the same time sometime next year. That's why the BTL is no go as its too much effort for very little tax gain.

That's what I expected to be honest. Is there any chance you can talk them into putting the +1% offer in writing?

There's a massive difference between the rates, but if they won't give you that "consent to let" letter it may cause problems with renting the property if you wanted to do that via an agent and insuring the property may be problematic.

I would be equally nervous as "accepting" the penalty involves you ignoring correspondence which may be better answered.

itgirlinuk

kingstreet wrote: »

That's what I expected to be honest. Is there any chance you can talk them into putting the +1% offer in writing?

They have put it in writing - via the letters that I am supposed to ignore...but it does not give me a comfortable feeling.

franklee

itgirlinuk wrote: »

The product they are offering is a "consent-to-let" product at 5.65% while the 1% penalty will bring it the total rate to 2.65%

This is confusing. Are you sure it's not "consent-to-let" at the extra 1% staying with your exiting mortgage and "buy to let" as the new product at 5.65%? Perhaps the person you spoke to at Halifax got it mixed up. Or maybe they are trying to weasel out of their responsibilities to the tenant if they give consent?

I would be asking Halifax for clarification. If you go the 1% penalty route have they given consent to let or not?

Good point about checking with your insurance company, you need to know there won't be any problems should you need to make a claim.

I tend to think if it's important get it confirmed in writing.

If you use a reputable letting agent they should ask about consent to let, same with clued up tenants, see the end of the sticky thread if you want to see why they would ask.

kingstreet

franklee - Halifax has form for trying to "squeeze" CTL applicants into higher rates with a fee and a three year ERP. One client of mine who needed a short-term CTL while he sold was told if he didn't change they'd write to him in three months to demand he write back to them and declare he wasn't letting the property. There was no suggestion of a 1% penalty rate being the fall back action.

itgirl - if you have it in writing, I'd do what they say. Having told you the implications of doing what you plan to do, it would appear there's not a lot they can do about it. I've never heard of a lender taking any kind of action even on a completely unauthorised let.

itgirlinuk

franklee wrote: »

This is confusing. Are you sure it's not "consent-to-let" at the extra 1% staying with your exiting mortgage and "buy to let" as the new product at 5.65%? Perhaps the person you spoke to at Halifax got it mixed up. Or maybe they are trying to weasel out of their responsibilities to the tenant if they give consent?

The way that Halifax told me was that to get CTL, you need to move the mortgage to a higher interest rate. I didnt take the offer and said I would look around. Called back 2 weeks later and asked them to explain the rules, they said they cannot force me to change the product and go on a higher interest rate.

franklee wrote: »

I would be asking Halifax for clarification. If you go the 1% penalty route have they given consent to let or not?

I will ask them this again! Not sure where I stand on CTL if I paid the penalty.

kingstreet wrote: »

I've never heard of a lender taking any kind of action even on a completely unauthorised let.

Halifax mentioned this as well and said it would be highly unlikely for them to sue me. But I am more worried about negating the landlord insurance and don't have any cover!