Breach of Terms and Conditions ??

olive7142

I'd be grateful for any advice about our situation We are considering offering to put up some friends (with 1 son) during term time who work in the school next door - possibly only for a few months - as their main residence is in Ireland Someone mentioned we should check with our mortgage company (First Direct offset - excellent deal on 260,000 loan of 0.5% above base for last few years)

I spoke to them today and they informed me we would not be able to continue with our mortgage with them if we have friends/lodgers/tenants as it would be a breach of their terms and conditions They only accept rent a room with 1 person They mentioned that our friends could become sitting tenants - and would not accept any other way of looking at it

We do not wish to lose our good deal but would like to help our friends I have worked out it would cost at least 4000/year more in mortgage repayments if we switch deals I'm aware we need to inform our insurance company , but am not sure where we stand legally if we allow our friends to stay, and what the mortgage company can do if they find out ?

Many thanks

opinions4u

While I couldn't possibly suggest that you simply keep quiet and do it, that's exactly what I would do.

But the mortgage company are right. At the absolute extreme they could push for repossession. In the real world they'll simply stick you on to a higher interest rate at their discretion. If they find out.

I doubt people staying with you for three months at a time would get any legal rights. That's not an area I have expertise in though. Perhaps one for a free half hour with a local solicitor (or a union's legal helpline).

dunstonh

if we switch deals I'm aware we need to inform our insurance company

You need to inform your insurance company anyway as most insurers will not cover you if you have lodgers or will significantly reduce cover if you do.

Guests staying over for a short period is normally not an issue. The length of time is likely the issue here. I share the same view as opinions4u on this one.

Simon_gloster

dunstonh wrote: »

You need to inform your insurance company anyway as most insurers will not cover you if you have lodgers or will significantly reduce cover if you do.

Also in some circumstances insurers will inform a lender about a change in status as they have a registered interest in the property.

Thrugelmir

opinions4u wrote: »

While I couldn't possibly suggest that you simply keep quiet and do it,

Unless something goes wrong....... then the consequences are severe.

olive7142

Many thanks for replies - I have done some more research and it seems that many people are unaware that they are breaching their terms and conditions with certain companies by having more than 1 person living with them Presumably if you don't say anything they rarely find out though the point about insurance company communicating with mortgage people if pertinent We are not prepared to take the risk of losing our mortgage deal , so have had to let our friends know that they will have to look elsewhere unless we can persuade First direct to reconsider I am planning to check whether it is OK to have relatives (eg father in law) living with us in the future and also how long we can have friends to stay while they look for alternative option It will be interesting to find out whether we could use the extra rooms for B and B , or other ventures as we are keen to help pay for the building work we have undertaken for our original plan Thanks for your help A very useful forum

Simon_gloster

olive7142 wrote: »

Many thanks for replies - I have done some more research and it seems that many people are unaware that they are breaching their terms and conditions with certain companies by having more than 1 person living with them Presumably if you don't say anything they rarely find out though the point about insurance company communicating with mortgage people if pertinent We are not prepared to take the risk of losing our mortgage deal , so have had to let our friends know that they will have to look elsewhere unless we can persuade First direct to reconsider I am planning to check whether it is OK to have relatives (eg father in law) living with us in the future and also how long we can have friends to stay while they look for alternative option It will be interesting to find out whether we could use the extra rooms for B and B , or other ventures as we are keen to help pay for the building work we have undertaken for our original plan Thanks for your help A very useful forum

Your welcome.

Good shout....to lose a deal for the sake of a few months is a hard pill to swallow. As some said you could not tell anyone, thousands do, never change their insurance over etc, but when they do need help when something goes wrong, the policies are invalid, people complain etc. Do things by the book, as you aeem to be, and you'll be OK.

Immediate Family members may be slightly different with the majority of lenders, double check.

The_J

If it is friends and it's purely an informal arrangement then I cannot see the problem.

What if an old friend who lives abroad comes to stay for a week? A month? Where do you draw the line? The bank aren't going to find out or care.

mildred1978

olive7142 wrote: »

It will be interesting to find out whether we could use the extra rooms for B and B , or other ventures as we are keen to help pay for the building work we have undertaken for our original plan Thanks for your help A very useful forum

You have absolutely no chance of being allowed to do B&B. A) you'd have to register with the local council as a business and pay business rates on parts of the property. As soon as the address becomes a business which is marketed to the public FD will withdraw your mortgage as they do not offer lending on commercial
Properties.