what happens if you inform santander youre renting the property?

Moneymaid

Hi I am at the end of my fixed rate but rented out my property without telling santander as I was struggling financially. Now I want to remortgage to a better deal but know if I tell them the rates will be higher. If so. . . .by how much? Or would I be better staying as things are on their base rate. They arent advertising their products so I cant even compare the difference.

All advice welcome.

Ps still struggling financially. I have 20k debt on top of my mortgage to deal with too.

Bob_24601_2

Hmmmm - Well if it was me, I would tell Santander.

I have been in the same situation as you (apart from the not telling Santander). I am also with Santander, and I brought a property a few years ago on a fixed rate mortgage, this had also ended, and I went on their SVR.

As I was looking to move location, I contacted Santander to ask about renting my house out and if I need to go onto a BTL (Buy To Let) mortgage. Santander advised that they do not do BTL mortgage, but as I was upto date with my payments, they could provide a CTL (Consent to Let) at a cost of £295, and this will allow me to stay on the SVR.

When I looked around for new deals for the BTL, these were still very expensive compared to the SVR, and also included massive fees.

I agree I could of maybe got a better rate if I had not of informed them, but i'm sure there will be issues if you don't inform them your renting out the property.


Also bare in mind (sorry if you are already aware), you will also have to pay tax on the income you are receiving from the rent.

jonewer

Two problems

1, If you dont have landlord insurance and the house burns down, your insurance will be void and you'll be left paying a mortgage on a pile of ash and rubble.

2, You're effectively avoiding tax. Also note that if you havent used the house as a principle residence for 3 years, you become liable for CGT if you sell it.

Not a smart move.

kingstreet

First thing - you are looking for a customer retention product from your existing lender, not a remortgage. If you ask for the wrong thing, you'll get the wrong products. Remortgage products are for those moving their mortgage to another lender.

Next, you should seriously consider requesting formal CTL from your lender. You are risking your tenants' home if you ever get into difficulty as they get less protection than they would if you had permission.

You might wish to ask Santander about the retention products available to you. However, if you have a high loan to value, or are on interest-only there may be very little, if anything, offered.

Moneymaid

I have landlord insurance for the property but im wondering if this is all worth it and I might be better trying to sell it. The value has plummeted and I think my loan to value would only be 90 %. But my neighbour is trying to sell for year now and hasnt been able to.
Also I worked abroad for 2 years in a taxfree country so I dont know if this would affect any tax issues. Ive been back in blighty for 7months and employed for 5 only and any money I get for my rent doesnt cover my whole mortgage or take me to the next tax bracket. Does any of this matter ?

whitewing

jonewer wrote: »

Two problems

You're effectively avoiding tax. Also note that if you havent used the house as a principle residence for 3 years, you become liable for CGT if you sell it.

*Wanders into the thread to be nosy*

Has this changed in the last few years then, because in my vague awareness, I thought that you technically only had to have lived in a property for one night in your lifetime to not be liable for CGT. (Note that this situation has not affected me, which is partly why I don;t know much about the subject).

HappyMJ

jonewer wrote: »

Two problems

1, If you dont have landlord insurance and the house burns down, your insurance will be void and you'll be left paying a mortgage on a pile of ash and rubble.

2, You're effectively avoiding tax. Also note that if you havent used the house as a principle residence for 3 years, you become liable for CGT if you sell it.

Not a smart move.

Avoiding tax? I really doubt there would be much to pay and what's that got to do with the bank?

The only problem is that it is in violation of the T's and C's of the mortgage product and the mortgage could be cancelled at any time forcing repayment in full immediately. If the property can't be remortgaged it would have to be sold or the bank may repossess if not sold in the time period they specify.

It does not affect buildings insurance...as long as the owner has declared to the buildings insurance that it is let but again that has nothing to do with the bank.

HappyMJ

Moneymaid wrote: »

I have landlord insurance for the property but im wondering if this is all worth it and I might be better trying to sell it. The value has plummeted and I think my loan to value would only be 90 %. But my neighbour is trying to sell for year now and hasnt been able to.
Also I worked abroad for 2 years in a taxfree country so I dont know if this would affect any tax issues. Ive been back in blighty for 7months and employed for 5 only and any money I get for my rent doesnt cover my whole mortgage or take me to the next tax bracket. Does any of this matter ?

The money you get in rent is only offset against the interest...not the full repayment. However, there are other expenses you can offset such as your landlords insurance and any mileage in the car to get to/from the property to undertake any maintenance which can also be used to reduce your profit. Generally there isn't much profit until you sell.

HappyMJ

kingstreet wrote: »

First thing - you are looking for a customer retention product from your existing lender, not a remortgage. If you ask for the wrong thing, you'll get the wrong products. Remortgage products are for those moving their mortgage to another lender.

Next, you should seriously consider requesting formal CTL from your lender. You are risking your tenants' home if you ever get into difficulty as they get less protection than they would if you had permission.

You might wish to ask Santander about the retention products available to you. However, if you have a high loan to value, or are on interest-only there may be very little, if anything, offered.

The tenant has exact same rights whether landlord has consent to let or not. The bank would have to repossess from the owner and terminate the tenancy giving 2 months notice as a tenancy is usually 6 months this is the time taken to repo the property so it's exactly the same if the landlord simply wanted the property back in any case.

kingstreet

I just went off the opening line of this sticky, which I read a couple of years ago;-

https://forums.moneysavingexpert.com/discussion/1377883

Without the lenders permission to let, you could be thrown out of the property without any notice.

Then

If the landlord had permission to let from their mortgage lender, then the tenant would be given at least 2 months notice to find another property. Without the landlord asking for permission to let, the tenant could be thrown out with little of no notice.

Apologies if I have not read far enough to see the assertion refuted.

G_M

kingstreet wrote: »

I just went off the opening line of this sticky, which I read a couple of years ago;-

https://forums.moneysavingexpert.com/discussion/1377883


Then

Apologies if I have not read far enough to see the assertion refuted.

I'm afraid that sticky is somewhat misleading and inaccurate.

I may be biased, but I believe this post here to be a better explanation of the tenant's position in the event of the landlord defaulting on his mortgage.