Consent to Let - Santander

mither_2

Hello,

I've read the forums and many threads are slightly dated on this subject.

I currently live in a 3 bed semi detached house (another room could become a 4th bedroom for rental purposes). The rental value is probably c£800 - £900 per month. The house cost £179k and the outstanding balance of the mortgage is c£125k (I paid a big deposit)

I'm fixed at 5.1% until May next year. Prior to this I may move out of the house and would like to let it. I spoke to Santander today. They checked my payment record (always paid on time and in full for 2.75 years now) and they said they would give me a letter of consent for a fee of £275. I assumed this was a one off fee but reading on these pages it seems like I'll also have to pay an annual fee?

I'm told that if I don't refix I'll go onto the standard variable of 4.74%. However, what are the chances of me refixing in May 2015 (they are currently offering 2 year fixes for 3.79%) and then hanging on for a couple of months before asking for the letter of consent and commencing letting the house out?

Would santander look at this as a blatant dodge to avoid paying a higher BTL rate and refuse or would they be more concerned with my ability to repay it via rentals and allow it?

Their buy to let mortgage includes a fee and the current rate is 4.99% so I'm better off on SVR than taking a buy to let mortgage.

My situation is that I'm currently a live in landlord but have now decided that i would prefer to live on my own and so would rent out the house and get a flat on my own.

The other option is to sell in May next year but not sure that i'd really want to do this as value has been lost and would like to stay on the ladder until I see another property that I want to buy.

Any suggestions welcome.:)

holly_hobby

If you obtain CTL, and its still let at the end of your product term, they put you onto SVR & a loading, or will force you onto a BTL rate. You won't be able to secure a residential product, because technically its no longer your residential dwelling (ie you are letting it for commercial purposes).

Whether you choose to accept their offer, or move elsewhere will be your perogative at the time.

Please don't forget to obtain landlord bls (& contents if affordable) ins, and to register for annual self assessment, where you will report your net rental income for tax purposes (nb - gross rental income may be reduced for tax purposes by offsetting business costings such as ....

• mge interest (NB - if on a capital and interest (repayment) mge your mge lender will confirm what your accrued mge interest totalled over the proceeding yr/accounting period).
• various associated management (inc insurance) and legal fees
• fees associated with arranging the let inc any lender admin fees and any accountancy fees etc
• essential maintenance and safety costs

To which HMRC and/or your tax practitioner will advise further.

Hope this helps

Holly

mither_2

Holly

Many thanks for your advice. I'm aware from friends who have done it that there will be a lot to do.

what is a loading? If I can just continue on the SVR indefinitely then this is the simplest thing to do. If I'm getting charged fees then this may change things.

I wonder whether its better to apply for the consent before my current fix runs out or wait until I'm already on the SVR. It seems to me like I'm better to do it advance as their is no guarantee that I'll get it and can then think about remortgaging elsewhere.

holly_hobby

Loading is an additional rate loading, which on CTL will be circa 1% on top of the lenders prevailing SVR/BMR (as this essentially represent semi-commerical rates).

Whether you choose to fix now or not (with any associated fees) may be better answered, if you know that Santander will (if they permit your CTL) leave you unaffected on any resi deal until it ends, as some lenders will seek to take mortgagors straight off any resi rate/product, given the now commercial aspect of the mge.

Unfortunatley, I don't have any experience of Santander and their approach to CTL request - so give a tentative call to sound this out, and/or ask about and see what their typical stance has been with the other guys you have referred to.

Hope this helps

Holly