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Renting out my home which has a mortgage
Shaunybabes
Posts: 1 Newbie
I have recently contacted my mortgage lender and indicated i want to rent out my home.
They have informed me that my mortgage rate will increase by 1%, they require a valuation of the property and an administration fee.
Is this the case with all lenders?
it seems a complete con because nothing has changed apart from who will be living in the property.
Does anybody know how i can challange this?
Look forward to your replies.
They have informed me that my mortgage rate will increase by 1%, they require a valuation of the property and an administration fee.
Is this the case with all lenders?
it seems a complete con because nothing has changed apart from who will be living in the property.
Does anybody know how i can challange this?
Look forward to your replies.
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Comments
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Check out the rates/fees for a buy to let remortgage product, which is the alternative route open to you.
See how one compares against the other.
You might discover consent to let isn't as expensive as the alternative. As you're requesting the lender's agreement to a change in your mortgage conditions, they could demand the commercial equivalent.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Nothing has changed? The terms of your residential mortgage state that the mortgage is provided so that you, the borrower can live there.Shaunybabes wrote: »I have recently contacted my mortgage lender and indicated i want to rent out my home.
They have informed me that my mortgage rate will increase by 1%, they require a valuation of the property and an administration fee.
Is this the case with all lenders?
it seems a complete con because nothing has changed apart from who will be living in the property.
You are, however, proposing to move out and let out the property to someone else and there is a greater risk to the lender when a property is tenanted. It should therefore come as no surprise that they wish to levy further interest % - although some lenders merely charge an admin fee but place a strict time limit on the length of time for letting the property out
Yep, you could always tell them you're going to switch to a BTL product so you don't need them. However do check out the requirements for a BTL mortgage first - min of 25/30% deposit/equity and a requirement for the rent to be at least 125% of the mortgage repayments. Interest rate normally in excess of those for resi mortgages.Does anybody know how i can challange this?
You may then think that your lender is perhaps offering a better deal.0 -
I know lots of people who just let out without asking the lender. It seems rather common. But beware of the risk of void insurance should anything go wrong.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0
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Having strangers living in your mortgaged property and who you will become dependent on for covering the payments is not why you originally applied for a residential mortgage. You are proposing to change the goalposts by wanting to run a letting business and increasing their risks, so it's only fair that they can, too.
Some lenders will not give Consent-To-Let at all and will insist that you convert to a Buy-To-Let mortgage which has far more stringent conditions and a much higher interest-rate.0 -
If you are as green as you sound on the whole concept of letting property, I would suggest some bedtime reading:
http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12
Paying a little extra on your monthly mortgage could be the least of your worries!0 -
Shaunybabes wrote: »
it seems a complete con because nothing has changed apart from who will be living in the property.
.
...and the fact your property is now a commercial concern and you're using it as a business.0 -
Turnbull2000 wrote: »I know lots of people who just let out without asking the lender. It seems rather common. But beware of the risk of void insurance should anything go wrong.
Insurance is the least of your worries. I know of one person whose mortgage company foreclosed on the mortgage and he lost the house.0 -
kingstreet wrote: »Check out the rates/fees for a buy to let remortgage product, which is the alternative route open to you.
See how one compares against the other.
You might discover consent to let isn't as expensive as the alternative. As you're requesting the lender's agreement to a change in your mortgage conditions, they could demand the commercial equivalent.
I've been looking for a new BTL mortgage and been very surprised how the market has changed in 12 months. No deals are anywhere near what I got last year and most have arrangement fees in the order of £2000 to get the best deals too.
Definitely 1% uplift is a bargain in comparison!Remember the saying: if it looks too good to be true it almost certainly is.0 -
You could share your opinion with the Lenders jj but I doubt it will change *their* perceptions of the riskjjlandlord wrote: »This may be true for someone building a BTL portfolio, but I'm not convinced this can be generalised.
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