Becoming a Landlord - mortgage and insurance...

Wagster

Hi all,

I'm not sure if this is the right place so apologies if I'm wrong.

I have owned a flat for 6 years but now due to a job change I have to move out of the area. I was planning to keep the property, let it out and rent something in my new area.

I just phoned my current mortgage provider (Britannia/Co-op) who I have been with for all 6 years. My current fixed rate period comes to an end 1st August so I was hoping to remortgage to another fixed rate and change to a landlord mortgage if necessary.

The first surprise was that she said because I will be letting the property out I cannot change mortgage product (i.e. cannot get a new fixed rate) so I will be forced onto their svr rate +1% (because of the landlord situation). So that's 5.74% currently:eek:

This is all new to me so I'm asking if that is normal? If I was to switch my mortgage to a new firm what sort of product am I looking for - remortgage or buy to let mortgage? Will any comparison tools be any good in this situation? And would I find anything much better than 5.74%? My loan is about 72% the value of the flat.

Also my contents insurance was with Coop and they have said they do not offer any kind of landlord contents insurance. Could anyone recommend some decent places to get that type of insurance and and comparison tools that cover landlord contents?

Thanks for your help.

Craig

BitterAndTwisted

If your current lender won't give you Consent-To-Let then you will in likelihood need to find a Buy-To-Let mortgage. These products generally require you to have 25% equity and that the proposed rent is 125% of the mortgage-payments.

Has going into business as a landlord ever been part of your long-term investment plans? If it hasn't, and it's not risk-free by any stretch of the imagination, I would strongly suggest that you consider selling up.

Wagster

Interesting. The current lender will give me consent to let but some of the terms, as detailed above, took me by surprise.

They only require me to have min 15% equity (I currently have about 28%) and the minimum rent required is well below my repayments and well below market expectation for this area. Perhaps I am being rewarded for being a loyal customer?!

I love the flat and fully intend to return to this area in the future so it makes sense to hold on to it.

SuzieSue

I know someone who was on a fixed rate with the Halifax and was in negative equity when they asked for CTL. Halifax said that as he was on a fixed rate there was no problem with him getting CTL until the end of the fixed term. After that, they said they would review the situation.

SuzieSue

Oh, and he uses Simple Landlords Insurance. But he hasn't made a claim so don't know what there are like claim wise.

Werdnal

If the flat leasehold? Have you checked you are actually allowed to let it?

If you love it so much, are you prepared to have it used and abused by tenants? Many LLs fall into the trap of letting a property they have lived in and cherished, and cannot deal with the emotional stress of having tenants who do not feel the same aboutit or treat it with the same level of respect. Are you sure you are ready for this?

G_M

Letting your property involves a whole host of considerations. Many of them are listed in this post and/or the links within it. Read!

You now know the options with Coop - CTL at a higher interest rate - so go see a mortgage broker and shop around! Include the mortgage costs in your projected budget when you complete it, as well as factoring it into your tax liability.

Same with insurance. Shop around.

And look ino all the other requirements!

tbs624

You could try Alan Boswell for LL insurance - if you sign up to Tessa Shepperson's LandlordLaw site, or join of of the national or local LL associations you should qualify for a discount on the premium. The membership fees and the premium can be set down for your tax return

tbs624

G_M wrote: »

go see a mortgage broker and shop around! !

.... make that a "whole of market" broker