consent to let - does this help me?

GoldenEye07

Currently own a flat with a friend but looking to buy a new property with my wife later this year/early next year. We have nearly 20k saved.

My friend and I are currently overpaying on the flat as when we attempted to move on at the start of this year there was no equity so couldn't sell and our lender Standard Life wouldn't allow permission to let.

However our mortgage has recently been taken over by Woolwich (Barclays), I gave them a call yes'day to touch base and they seem to think giving permission to let will be straighforward assuming we have never missed a payment or are in arrears. They can't confirm this until the mortgage is officially moved over but the girl I spoke to said it won't be a problem?

My questions are as follows:

1) Why are some lenders so relaxed about giving permission yet for some its not even an option?

2) I know some lenders will ignore my current mortgage (if its on CTL) when I go to buy a new place and some will count it as an outgoing even though somebody else is paying my rent.....Does anybody have a guide to which lenders will ignore my 1st mortgage for affordabiltiy?

3) Finally, what do I need to put in place to rent my first property, landlord insurance etc?

Thanks.

GoldenEye07

Anyone able to offer any comments on the questions raised above?

Simon_gloster

CTL if given and tje mortgage is considered self funding will be ignored as you say for affordability purposes.

Should consent not be granted, and you woupd have to prove it, then the whole debt would be taken into account for affordability purposes.

mcurtis

My wife and I have just done something similar - we couldnt get a high enough price on our first home to enable us to afford the deposit for the next one, so we got consent to let.

Our first home is let on a guaranteed rent scheme. Really simple to do, they take most of the risk but this is reflected in their fees. We had to get consent to let and landlord buildings insurance (contents too if you plan to let it furnished!). The rent just about covered the mortgage payments, but we were still asked to provide all of the details for the mortgage application.

Finally got a mortgage approved the other week, which was a bit of an effort. We ended up using a local broker / advisor (not sure of the terminology here) who was recommended by family, and they were absolutely brilliant. They knew which lenders would be more receptive to giving us a second mortgage at 90% LTV, did everything for us and it was really quick.

The broker took copies of our consent to let and the rental agreement. One thing that seemed to be an issue with a couple of lenders (if I remember rightly) was that the property had to have been let for 6 months.

Finally, dont forget to do a tax return if you do let it out! Bank staff, brokers and your letting agent (if you use one) will all tell you the same...

dimbo61

Sounds to good to be true ?
Girl on the phone said it would be OK Just like that ! is a long way from getting consent to let.
Would renting solve your problems
1 will you earn 125% of the mortgage payment as you need to pay for landlords insurance, EPC, Gas safety certificate, TAX,ETC
2 will your NEW LENDER ignore the current mortgage with your friend? or you and your G/F could end up renting for a very long time
3 cant you sell now and make a clean break even if you get little if any money back ( NO equity)
4 THE very first post by someone who is now renting out there property with a guaranteed rent company who take a big cut of the rent and put anyone in your home who they hope will pay the rent !!!!
What happens if they wreck the place ? dont pay the rent? lose there job? can you then cover 2 mortgages
How did the poster ( first time ) get a 10% deposit if he/she could not get 10% equity when selling the property unless in negative equity!!
Sell the flat and treat it as renting for X years if you make no profit

betmunch

1. Its down to the individual lenders apitite for that kind of business. standard Life dont want it, woolwich are happy with BTL. 2. This has become increasingly common, most brokers know which lenders take this situation and which lenders say they'll take it then try to get out of lending. 3. I would check out the landlord zone website, or theres a handle booklet from BMSolutions on it

Yorkie1

See this thread for detailed response to your initial Q3 about letting property out.

Also, as it's a flat, check that your lease allows sub-letting. Not all do.

GoldenEye07

Thanks for the replies, some useful points of view...

I do of course know that the girl on the phone has to be taken with a pinch of salt and I can't seriously consider this until they definately give CTL, however was only stating what she said and that this was far more positive than the response I got from Standard Life.

If they were to give me permission I'm aware there are still a number of factors to be considered before I can rent the flat out, but the main purpose of my post was to get some info from those who have did a similar thing and if anyone knew of lenders who "ignore" mortgage 1 in this situation.

I believe this is something that is fairly common now so I assume a whole market broker will be able to target lenders that act in this manner?

There is of course the option of selling the flat and taking the hit on it, but it would likely be around 10-15k shortfall and as this is between my friend and I, I wouldn't be keen to touch my wife and I's savings so not sure where that £ would come from.

The CTL option although still in need of further exploring certainly seems the most viable to allow both my friend and I to get on with our lives?

Any other points of view more than welcome.

Thanks again.

GoldenEye07

Just as an update to this, we filled in the application and got CTL last week, was all very straightforward.

So the plan now is to spend the next 3-4 weeks doing some decorating and getting the flat geared up to go on the rental market which at least lets my friend and I move with our other halves.

The dilemma I have now is whether my wife and I look to buy a new house now or do we go and do a short term rent somewhere to maybe try do one last push on the savings. The reason I say this is we have just short of 20k saved and are looking at houses in the 165-170k bracket, so when taking fees into account it’s basically a 90% LTV mortgage we would be after.

Our broker has found a few suitable products (anyone know any good 90% deals currently?) but the monthly payments were coming in around 800-850 pcm and I’m not sure if we should try to push the savings up one more time in an attempt to make a 15% mortgage or should we just go for it now. I realise that only we can decide this but I’ve been back and forward with my thinking a few times.

Ultimately we could afford it and be reasonably comfortable so I wonder if we should just go for it but then we can’t apply for a new mortgage until the flat is rented and my income is freed up so it would mean we would need something short term anyway once we leave the flat, so would I be better getting a 6 month rent rather than trying to stay with a friend or family in the hope a suitable property appears (could take a while potentially)

I suppose we need to be searching for both houses to buy and small flats to rent and gauge it from there?

Sorry for the long winded post – just wanted to update those who have been helpful previous, any advice is welcome?

gemma.zhang

Not sure u would need to let out your current place first before applying for mortgage. I am applying for HSBC mortgage, planning to let out our current place with consent to let, was told by HSBC the current property will be considered as self sufficient. Our rent is about 125% of repayment though, thought this might have helped.

Yorkie1

I think you will find that most 'short-term' rents are in fact 6 months long anyway. Given that it can easily take 3+ months to buy a new property, I'd go for that 6 month tenancy and, if need be, try to let it run onto a statutory periodic tenancy thereafter so that you only then need give 1 tenancy period's notice if you run over the 6 months.