Lodger - Not allowed by mortgage company!

buzbyc

Hi all,

Just a quick question for any experts or those of you with experience.

We were considering taking in a lodger/family friend, partly to help out and partly to secure some additional income.

Checked with insurance company - No problem - increase in yearly premium of just over £1.

Checked with mortgage lender (co-operative bank) - NO. simple as that.

As far as I can see a "NO" from the mortgage company prevents us doing this and there doesn't seem to be any way round this.

Is this normal?
Is there anything else I can do to make this happen.

Any thoughts would be much appreciated.

Nick

jjlandlord

CHeck your mortgage terms, but I would think that they don't have a say regarding lodgers, only tenants.

Thrugelmir

Seems to be at the discretion of the lender. From the standard mortgage terms and conditions.

Throughout the Mortgage Term, you must tell us in writing, if we ask you to do so:

• who is living in Your Home, and
•if there has been any change in who is living in Your Home since the
date we last asked you.

You must ask for our consent before allowing any other adult to occupy
Your Home. As a condition of giving you that consent we can require that adult first to give us a written waiver or postponement to our rights of any rights he may have in Your Home or the proceeds of its sale. He must also agree not to exercise any of those rights against us or in competition with us. This waiver or postponement will be in the form we require.

buzbyc

There didn't seem to be a lot of debate when I just spoke to them.

Their comment was that Lodgers were not allowed with any of their mortgages, which suprised me!

Sounds like there's nothing much I can do!

Thanks anyway.

NIck

BitterAndTwisted

Perhaps they have misunderstood? Lodgers have absolutely no security of tenure, so there cannot be any risk to the loan whatsoever as long as you continue to occupy the property full-time. Discounting for the moment any emotional consequences should your relationship break down.

MentalMinnie

Try calling them again, and speak with a different person. I always do that if the first answer sounds a bit 'iffy'.

G_M

My guess also is that you happened to get an advisor who did not understand the distinction between tenant and lodger. Speak to someone else and if you get the same result ask for a manager. Make it clear you will still be living there as your only/main residence yourself.

Ultimately, if they still say no, I'd be inclined to ignore (this may lead to a storm of contrary advice) but frankly, provided you continue to pay the mortgage and there are no arrerars
a) they are unlikely to know and
b) they are even more unlikely to redeem the mortgage/seek possession over a non-tenant's occupation

It is however possible that if they did find out they increase the interest rate/ move you off a preferential rate/ or impose an admin fee.

System

BitterAndTwisted wrote: »

Perhaps they have misunderstood? Lodgers have absolutely no security of tenure, so there cannot be any risk to the loan whatsoever as long as you continue to occupy the property full-time. Discounting for the moment any emotional consequences should your relationship break down.

However lodgers are in the ideal position to become squatters.

princeofpounds

Mortgage companies do care about lodgers, because they worry about what might happen if that person were to establish an economic interest in the house (for example by doing building work for free).

However, I am not sure how much they can/would really do if you were to get one. It's not like a tenancy where you need approval to get a proper legal structure, and I suspect that they can't really enforce how you live in your own home. And given they never care about permission to let for tenancies, are they really going to care about lodgers?

BitterAndTwisted

!!!!!! wrote: »

However lodgers are in the ideal position to become squatters.

They are? In what way?

System

Don't have to force entry as they have a key and following on from that they can prevent the legal owner from lawful access to the building