Charges for letting mortgaged property

JamesF2

Hello.

Following a house move and failing to sell our old house we let it. We informed the building society we have a morgage with. All fine. They have now written that three years are up since they gave permission and now want to add a 1.5% addition to the mortgage interest rate. A year will cost an extra £900.

I phoned and threatened to move if they didn't reduce this but without any luck. Does any one know what sort of figure other banks / building societies charge.

Thanks,

James

holly_hobby

You have effectively held a BTL (effectively a semi commercial mge) luckily on residential rates, under a consent to let arrangement for the past 3 yrs (which is a tacit agreement with the lender, and may be revoked as they desire)

CTL arrangements are only ever meant to be a temporary arrangement (accidential landlord), and generally after a 3 yr period if the property is still let, in the lenders eyes this is now no longer a temporary situation.

So, the lender now wants to move you effectively onto semi-commerical lending basis by loading your rate by 1.5% - if you wish to move the mortgage you shall have to be on to a specific BTL arrangement with another lender (if your lender does not offer BTL finance).

You may want to visit a whole of market broker to source the most suitable BTL deal for you, that may also have free legals.

The max LTV will be 80% (I/O or C&I), min earned income 25k (although a small no of lenders don't have the earned income criteria issue), and the rental income ratio will have to be 125% of mge payments.

Once you have had a look round, or if you, your loan/rental inc does not meet the above criteira, you may elect to accept he loading and stay with your current lender - if this is a voluntary decision, beware that they may subject you to further interest rare increases as they desire, as you are effectively operating os of your original residential mge agreement (albeit as I stated earlier, with their tacit agreement).

Hope this helps

Holly

The_J

As holly says thoroughly, you'll have to remortgage to a BTL and we'll need a lot more info to tell you if that is worth doing.

Nationwide will not budge.

Thrugelmir

JamesF2 wrote: »

I phoned and threatened to move if they didn't reduce this but without any luck.

The lender controls the situation. Your threats will have no impact.

JamesF2

Thanks to all that have replied particularly holly hobby for the detailed response. I'd love to be able to sell the house but for 6 months last year it was empty and had just two viewings. When we decided to let it again it was all sorted within 36 hours!

kingstreet

View your let as a business. Compare your residential lender's CTL offer against BTL offers available to you in the market and decide on a course of action accordingly.

Letting at residential rates is no longer an option, so stop viewing that as the "default" position.