Mortgage pickle

Baltieater

Hello,

I have a property with a £110k interest only mortgage (90% LTV). I believe it is in negative equity to the tune of £40k.

I am currently employed by a bank and therefore have a staff mortgage. The T&C's of this mortgage mean that I should not rent out the property.

However my circumstances changed and I moved cities with work and therefore decided to rent out the property as it was empty and I was paying rent in my new location.

I have now accepted a new job offer, which will commence from early March. This means that I will lose my staff mortgage benefit. At first I thought the only impact would be that my mortgage payments would rise when the bank returned me to a SRV.

However now I'm worried about the following:

Q) If I request to move to a BTL mortgage will they hit me with a demand for more capital as my LTV is 90% and this is high for a BTL? For example if they ask me to reduce the LTV to 70% then I would be looking at paying £22k...

Q) Ideally I would like to buy a new property where I am working instead of renting, but I can't sell the first house due to the negative equity. I'm stuck on the first rung of the ladder until the market picks up (or I take a sizeable hit). Is it feasible that the bank would entertain a conversation about another mortgage, which would combine both properties and is this idea even wise?

Q) Do you think my request to transfer to a BTL would trigger some form of investigation that might lead them to uncover that I breached the T&C's and therefore entitle them to make a retrospective claim for lost payments? Could they even repossess on this basis (no capital has ever been paid, as it's interest only).

I think the only sensible thing I have done is to pay a mortgage payment into a savings account each month and never spend the rent money. So I will have something to offer but no where near the £22k.

I apologise for the long message and thank you for reading. Any advice would be greatly appreciated.

Many thanks

GMS

You said you are in 40k negative equity so paying 22k wont get you to 70% LTV.

Is your new job with the same employer?

Breaching T&C's of the mortgage was not a good idea but you dont need to be told that.

bigadaj

You're post is a little confused as if you are in negative equity then you don't have 90% ltv, it will be in excess of 100%.

The fact that you breached your terms and conditions is a risk, and you may be subje t to penalties.

You won't get a buy to let as you don't have the equity, you can apply for a consent to let, but were then back to the fact that you've breached the terms of,your mortgage. And you can't really apply for another mortgage as you've not got any intention of living as an owner occupier.

Only advice is to save hard and try and save and get some equity as that would give you options in time.

Don't want to be overly critical but you do say you work for a bank and don't seem to have much of a clue about mortgages or finance which is concerning.

This is also a salutary post to those who think buying is always better than renting. It probably is if you're fixed and settled but buying when you may be moving for work or other reasons in a couple of years carries the risk that you might be worse off than renting.

Thrugelmir

If nothing else start paying the mortgage off.

Baltieater

Hi - Thanks for the replies.

Is the LTV worked out at the current value or the value at the time of receiving the mortgage?

I think the 'Consent to Let' option is the best one for me. When my rate increases to SVR then I could speak to the bank and request this. Has anyone done this? Will the bank require proof that the property is rented out?

To answer some of the questions the job is with a new employer and re: my 'not having a clue' - I don't work in Retail banking or specialise in Mortgages or wider Consumer credit fields.

Many thanks

Thrugelmir

Baltieater wrote: »

I think the 'Consent to Let' option is the best one for me.

This should only be viewed a temporary arrangement, i.e. up to 3 years. So may not solve your problem.

holly_hobby

Depending upon the role the OP holds in banking, a BO may effectively lose them their position/career - so as stated this must only be pursued as an absolute last resort.

What a pickle he's in .... pursuing consent to let & tsf to C&I is obv the only positive solution here ...

Hope this helps

Holly x

pc1271

I would certainly discuss the situation with your bank; if they have any sense (which admittedly, is doubtful), they will realise that they basically have two options:

i) Consent to buy-to-let and have you continue paying the mortgage
ii) Refuse, and potentially have you ultimately default on a mortgage you can't afford, leaving them with a house worth far less that the amount they lent.