Permission refused to rent - buy to let/remortgage i

JennyM80_2

Hello
Last year I relocated from my home due to work however I didn 't want to sell my home so I rented it out. I had permission from my mortgage company to do so.

This permission was valid for a year and is now expired so I need to reapply.

They have new terms and conditions which mean my interest rate will increase by 1% if I wish to rent the house.

They have also said that because the rental value is not enough to cover the mortgage repayment by 125% I am not eligable to rent out the property anymore. I have however supplied them some more financial information and they are looking into my case.

In the event they say I don't have permission to rent the house so I have only 2 options
1. sell the house and evict the tenant (I really don't want to do this as I have fought quite hard to stay on the property ladder) - I can't afford to keep the house untenanted.
2. remortgage, pay the early repayment fee to my existing lender.

The issue with remortgaging is I only have about 20-25% equity in the house and this isn't enough for the buy to let products I have seen on the market. Which means I have no choice but to sell which I really don't want to do.

I have a tenant, I am managed the finances fine.

I am at a loss what to do can anyone help?

Thanks

cattie

You say you relocated, so is there any reason why you can't sell the property & buy another one in the region you now live in? That way, you are still on the property ladder, as you put it.

I'm not sure if you mean the rent wasn't even covering the mortgage, but if it isn't, it would seem the wisest thing to do. Why keep a property that isn't paying for itself?

Fuzzyness

if you do decide to sell your tenant has certain rights to stay in the property in terms of their tenancy agreement. you may need to sell to investor who is happy to take on a sitting tenant.

PaulLuke

Although if the fixed term of any AST has expired then the OP could give two months notice anyway.

JennyM80_2

Hi
I don't want to sell because my relocation is not permanent. I moved from Manchester (where my house is) to Glasgow, but I will only be here for maybe another 18 months, then I am not sure where. I don't want the expense of selling and buying all the time when I don't know where I will be permanently based.

Also I would quite like to be able to return to my existing house at some point. Hence renting has been the ideal solution.

Not selling also seems to make financial sense to me. My rent in Glasgow is more then covered by my rental income from the Manchester house so I am still better off than when I was living in my Manchester house paying the mortgage (although the mortgage companies don't see it that way as they see letting as an investment - its not that for me really its just a way to stay on the property ladder while my permanent location is uncertain).

Also as the market is not exactly ace for selling at the moment I don't think it would be the best time to sell my house, I have put a lot of work into it over the years so if there is an opportunity to keep hold of it until the market improves I would like to do that.

Thrugelmir

JennyM80 wrote: »

I am at a loss what to do can anyone help?

Sell the property. Lenders set the terms. Currently you fail to meet them. So inject more capital into the property if you wish to keep it.

Failure to meet the terms may result in a black mark on your credit record. Which isn't worth the hassle longer term.

silvercar

I'd be tempted to write to the lender. Tell them they gave permission so you rented out. They've withdrawn consent but under English law you can't just terminate a tenancy, and even serving a section 21 notice is only the first stage in gaining repossession of your house. So ask them how they expect you to comply with them refusing to extend the CTL at the same time as complying with the law of the land.

sirmosh

silvercar wrote: »

I'd be tempted to write to the lender. Tell them they gave permission so you rented out. They've withdrawn consent but under English law you can't just terminate a tenancy, and even serving a section 21 notice is only the first stage in gaining repossession of your house. So ask them how they expect you to comply with them refusing to extend the CTL at the same time as complying with the law of the land.

The lender has already given an answer to this, pay an extra 1% interest and you can continue.

brit1234

I think the only option is to sell. If you raise the rent to get to that 125% mortgage/rent figure you are going to have an empty property.

JennyM80 wrote: »

Also as the market is not exactly ace for selling at the moment I don't think it would be the best time to sell my house, I have put a lot of work into it over the years so if there is an opportunity to keep hold of it until the market improves I would like to do that.

Can you tell me when the market is going to improve? Is it in a few months, a few years or next decade?

What happens as many think when the market continues to fall the next few years, your equity will be wiped out?

Thrugelmir

silvercar wrote: »

I'd be tempted to write to the lender. Tell them they gave permission so you rented out. They've withdrawn consent but under English law you can't just terminate a tenancy, and even serving a section 21 notice is only the first stage in gaining repossession of your house. So ask them how they expect you to comply with them refusing to extend the CTL at the same time as complying with the law of the land.

Granted for 1 year. So tenancy should have been timed to co-incide.

JennyM80_2

Hi
What I was actually hoping for here was some advice on what might be a solution such as if you are aware of any other mortgage products I maybe able to investigate which maybe able to help me in this situation given the breadth of knowledge on this forum.

Few points:
1. the tenancy couldn't be timed to coincide - I had a tenant for 8 months, then the property was empty for 2 months, then I have a new tenant who has a 6 month lease who has a long term interest in staying in the property. Its not as simple as I applied to let, the house was let. I am not sure the rental market works that way really.

2. there is also an early redemption fee on my mortgage to sell/get out of it which is another reason it makes sense to keep hold of it until the mortgage term is up.

3. Response to Thrugelmir: Inject more capital - nice idea but unfortunately if that was an option I wouldn't be here asking for advise and ideas.

4. Response to brit1234: No I can't tell you that obviously and thats really not a helpful response. The market where I own my house has not changed much in the past 10 years but ideally I would like to keep buying the equity in the house I currently own so as to avoid early repayment fees, expense of selling (agents fees/reports etc), expense of buying somewhere new especially when I don't want to sell my house and I don't know where I would be living. If I moved back to the house in a couple of years then improvements in the market in 10 years time might well be of importance to me.

5. Thanks silvercar - I am having a call with the mortgage company tonight to see if there are any options available to me and I have also got a call with a buy to let mortgage advisor to discuss what options, if any there might be out there for me.