renting out my flat mortgage company queries?

iam2103

Hi all, and thanks for looking. I am currently looking to move back in with my parents with my fiancee for just under two years so we can save for a wedding and a decent £20000-£30000 deposit for a house. I currently have a mortgage on my flat and will be there 4 years as of coming april. I am on the mortgage companies rate for my monthly repayments. I dont want to sell my flat as would not get the money i paid for it and i had a 95 % mortgage. Therefore i am looking to rent it out and keeo it as an investment. The question I have is do i need to change my mortgage to a buy to let mortgage? Also if not the case do I need to tell my mortgage company that I am renting my flat or do i just rent it out and pay the mortgage with the rent? I have heard so many different things on this situation I just want to get it verified. One more wha about a lease can I make one up myself or does it have to be trhough a solicitor? thanks.

hazyjo

Yes, you do need permission from your mortgage company that you hope to let your flat - that will probably come at a price, or they might insist you change to a BTL. Or they might flat refuse...

You'll also need permission from the freeholder. If it's a (relatively) new flat, or shared equity or anything, that will also affect things...

Lots more to consider - someone will be along with links, no doubt. Not as easy as it first appears. Personally, I'd only consider becoming a LL if I was absolutely desperate!

Jx

G_M

You may not need a Buy-To-Let mortgage but you will need Consent To Let from your lender.

There is a lot more to consider. Read this post, the links within it, and then come back with questions.

iam2103

will my mortgage company charge me for consent? And i cant get BTL mortgage as have no deposit to change to that mortgage. Thanks for the replies

Werdnal

iam2103 wrote: »

will my mortgage company charge me for consent? And i cant get BTL mortgage as have no deposit to change to that mortgage. Thanks for the replies

The mortgage company may charge a set-up fee, they may add a percentage to your monthly payments, they may set a 12 month period and review it then - possibly rescinding consent at that time - or they can do all 3 of the above!

They may also refuse! Each case is taken on its merits, how much you owe on the loan, compared to the value of the property etc.

Have you read the link supplied by GM above? There is more to it than taking the rent and paying the mortgage, much more! You need to understand your obligations as a landlord, there is a lot to learn and legal stuff to comply with. You also need to declare your income to HMRC for tax purposes.

Read the link and all the other website links it contains, and if you still have questions, come back and ask again.

Most importantly though, if it is a flat, is it leasehold? If so, you also need permission from your freeholder, and they may also refuse!

iam2103

Most importantly though, if it is a flat, is it leasehold? If so, you also need permission from your freeholder, and they may also refuse! What do you mean by this part. My flat is in a block of 6 not new old building and i own my flat. ??? thanks.

Thrugelmir

iam2103 wrote: »

will my mortgage company charge me for consent?

Who is your current lender. CTL policy does vary widely.

G_M

iam2103 wrote: »

will my mortgage company charge me for consent?

Only your mortgage lender can answer this question. Pick up the phone and ask. After reading my earlier link and deciding you want to go ahead.

Werdnal

iam2103 wrote: »

Most importantly though, if it is a flat, is it leasehold? If so, you also need permission from your freeholder, and they may also refuse! What do you mean by this part. My flat is in a block of 6 not new old building and i own my flat. ??? thanks.

Flats are often leasehold. The lease covers what you can and cannot do with the flat, and how much you contribute to the overall cost of repairs to the building, outside communal areas etc. Basically, the freeholder owns the building and you own the flat within it. Freeholder can be a single person, a company who manage it, or sometimes a "committee" type arrangement made up of the owners of each flat within the building.

Is your flat Leasehold or Freehold? Do you pay ground rent every year, and/or an annual service charge for maintenance etc. It is very unusual for flats to be freehold, whether it is new or old, but not impossible. You need to check the terms which you bought it under - do you have the lease?

Some leases specifically prohibit letting, and specify owner-occupier only, which is why you need to check. Even if it does state this, you may be able to get permission to let fromt he freeholder, but this will also probably mean a fee to amend your lease.

BitterAndTwisted

Read you lease. Even if it is one in a block of six you may still need to gain consent from the freeholder in order to let the flat.

Still, I cannot understand why you are considering letting the property and choosing to live elsewhere. Seems bonkers to me when you see what the risks may be. After you've paid the mortgage and service-charges, declared the rental-income for tax-purposes you may not have made a penny in profit. And still be paying the rents for your keep.

iam2103

me aslong with the other 5 people in the building pay for any repairs etc so no charge for garden work etc. Will have to check lease when home. I am moving out to my parents where i will be living free of charge. Where i hope to save a £1000 a month along with my girlfriend therefore £2000 a month for about 20months giving us a good deposit and money for our wedding. My monthly mortgage just now is £358 and in my area I can get rent upto £600 a month the least £500 a month which i would put all into my mortgage for my flat. As I cant sell my flat as its in negative equiaty wont get the money i paid for it or would easily sell it. And i cant live in flat and save £1000 a month. Thanks again.