Negative equity

cm34

Apologies if this is in the wrong place. Does anyone have any experience with Birmingham Midshires giving consent to let on a residential mortgage. I have 100% interest only mortgage with them and am in negative equity to tune of approx 20k. I can't cover the shortfall if I sell so only other option is letting it out but there's no way I can get a buy to let mortgage with negative equity and rent would only cover mortgage on existing rates. As far as I am aware they have stopped offering residential mortgages so I can't see them being too interested in giving me consent to let, just wondering if anyone had any experience with them in this situation. Thanks for your help

myhouse_2

Getting into Buy To Let is a big committment. Don't do it unless you have plenty spare cash, as the maintenance and legal responsibilities can add up.
You could perhaps arrange to sell the house and pay the 20k back as a loan.

cm34

thankyou for your reply, unfortunately there is no way I could cope with a 20k loan with my current financial situation. I understand letting is not something to get into lightly and I would rather not, although I do have a family member who could rent it from me and hopefully I could sell if the market picks up in a few years.

Thrugelmir

Could you start to repay the capital balance owed? Even in a small way.

ktez

Hi

I have also have a 100% mortgage with Birmingham midshire and have just recently received consent to rent my property from them. It was a simple phone call to them explaining I was renting the property out and renting elsewhere and they sent a letter out confirming that I had consent to rent for up to three years before they would start charging additional interest.

cm34

Thanks so much for replying, I was worried about ringing and asking but rang this morning and they were fine, so just waiting on confirmation in the post!

JQ.

You need to think very very carefully about this. Buy to let is a business with financial and legal responsibilities. If you can't afford a £20k loan and the rent will only cover the interest element of the mortgage what happens if :

Tenant stops paying rent and it takes 6 months to get them out
The tenant leaves and it takes 6 months to get a new one
Tenant leaves and trashes the house
The house needs a new boiler / roof / windows / kitchen / etc
House prices fall a further 20% following the collapse of the Euro
Interest rates rocket following the collapse of the Euro
After 12 months of Consent to Let Birmingham Midshires require you to switch to a BTL mortgage, thereby requiring a large equity injection from yourself, either that or repayment of the whole loan.

You need to think about whether letting the property now is just storing up more trouble further down the line.

There's a thread on here somehwhere by G_M I believe that provides a really good insight into running a BTL, might be worth having a read.