Mortgage worries

sw_jay

Hi I'm really after some advice.

My girlfriend and I have just purchased our first own home together and should be completing on 15th October.

We currently live in my girlfriend's house which is valued at around 120k. She owes 106k on her mortgage at the moment.

My girlfriend would really like to keep her house as she sees it as her investment for the future therefore we are planning to rent it out. We already have a tenant ready and waiting to move in and he will be paying more than the repayment mortgage.

Now here comes the problem.

We obviously realise that we need to let the mortgage company know that we plan to rent out the property. We spoke to them the other day and they stated that they will not provide us with consent to let. Nor can we move to a buy to let mortgage as we do not have 25% equity in the property.

I really do not know what else we can do. It appears our only option would be to find 16k to get us to the 25% mark but this simply is not possible. Or just say nothing and hope they don't find out.

We really would prefer to do things properly but the mortgage company simply won't assist us. Do they just expect us to leave the property empty whilst we continue paying the mortgage?

I really don't know what else to do. We can't get a BTL with another mortgage company as we don't have enough equity and if we were to move to a standard repayment mortgage with another company and then get consent to let in a few months time, that would be fraud!

The only other option is to sell which my girlfriend really doesn't want.

Are there any other options that I might have missed?

For your info the mortgage is with GE Money.

As an aside, would any landlord's insurance be invalid if we do not have the correct mortgage?

kingstreet

There seems to be little you can do, other than sell, or let without permission.

I hope you know that the tenant has little protection if your partner defaults on the mortgage without first obtaining consent. Consent to let protects them, by putting a legal responsibility on the lender to respect the tenancy agreement made between your partner and her tenants.

Landlord insurance is not affected by you having no consent to let. I spent an afternoon checking a few months ago and couldn't find a policy which insisted on consent to let being given by the lender.

I do however suggest you check the policy document for your cover, just in case you've got one I didn't check.

Engeroosi

Officially your gf lives in the property still and rents out a room, and just spends alot of time at the new place with you.

in reality, your gf lives with you in the new place, and the LODGER actually has the whole place to themselves.

I believe no buy to let mortgage or consent to let is required if one of the residents owns the property. I may be corrected on this.

sw_jay

Engeroosi wrote: »

Officially your gf lives in the property still and rents out a room, and just spends alot of time at the new place with you.

in reality, your gf lives with you in the new place, and the LODGER actually has the whole place to themselves.

I believe no buy to let mortgage or consent to let is required if one of the residents owns the property. I may be corrected on this.

Will the mortgage company not realise this though as my girlfriend and I will have a joint mortgage on the new house. Surely they won't be gullible enough to believe she's bought a 4 bed home with me but chooses to live in a small 1 bed?

As I said we'd really like to do things above board if possible, just finding obstacles in our way at the moment.

Thrugelmir

sw_jay wrote: »

The only other option is to sell which my girlfriend really doesn't want.

Do you drive on motorways at over 100 mph? Letting without consent follows a similar vein.

If you get caught you will pay severely. As you are breaking a contractual arrangement and therefore showing that you cannot be trusted. An important part of any business relationship. Once broken you will have a black mark put against you.

Thrugelmir

kingstreet wrote: »

Landlord insurance is not affected by you having no consent to let. I spent an afternoon checking a few months ago and couldn't find a policy which insisted on consent to let being given by the lender.

Standard clause in the terms and conditions has been for years. Even if its not. Insurance company could invoke non-disclosure of a material fact to decline

The beneficiary of the cover is the lender not the policyholder. As the property is technically the lenders property until the mortgage is discharged.