Letting out on a residential mortgage

Originalha

I recently bought my first house end of last year. I knew nothing about mortgages or anything like this so went to see a few people to know where to start.
I went to see Barclays and they said i would qualify for a mortgage, i asked them if i wanted to rent it out for a short period could i? They said yes thats fine as long as i informed them.
I went to see two financial advisors who both informed me that if i wanted to rent out for a period of time it should be OK and that 90% of people that rent out are on residential mortgages if i just change my forwarding adress. So i took out a mortgage with one these brokers
I didn't want to get a Buy To Let Mortgage as i was going to move in anyway after 6 months-1 year max and wasn't even sure if i would rent it out at all, i live with my mum and dad and just thought it would be a good time to get more money to save for nicer furniture.
Anyway i decided to let it out for a bit, i got a letter from my Mortgage company asking why the correspondance adress was different so i asked them for permission to let. I hadn't got their response by the time i had let the property out though.
I got a letter to say it was declined and if i wanted to let it i either had to repay mortgage in full or apply for buy to let mortgage and pay the penalties for early repayment.
So now i am stuck, they don't know i have let it out, i am stuck in a contract with the tenant for at least 5 months (with the break clause) and then i can move in. I don't know what my options are

grumbler

Why Credit Cards board while there are Mortgages & Endowments and House Buying, Renting & Selling boards nearby?

JakeGreen

Not sure what this has to do with Credit Cards? This should be in the 'mortgages' section surely?

If you're planning on living there within the next year I'd stick with the mortgage that you currently have. The rules for a Buy to Let mortgage won't allow you to live there.

I'm not sure about the veracity of the 90% figure, maybe this includes lodgers?

My advice is:

Keep paying the mortgage on time.

Keep your tenant happy and make sure the letting agreement is legitimate and that you meet the regulations for letting: fire doors, smoke detectors, gas certificate and the rest of it.

Leave the correspondence address as the let property address and arrange a Royal Mail forwarding to the address where you live.

You've tried to inform the mortgage company about what you were doing and there seems to be a bit of a misunderstanding at the beginning. As long as you keep paying on time, and do live there eventually I can't see there being much of a problem.

A buy to let mortgage would require a large deposit, 30% at least if you've never managed a let property before.

Some buy to let mortgages will only lend to you if you currently have 3 let properties... i.e. they are not easy to get!

Wywth

Originalha wrote: »

I recently bought my first house end of last year. I knew nothing about mortgages or anything like this so went to see a few people to know where to start.
I went to see Barclays and they said i would qualify for a mortgage, i asked them if i wanted to rent it out for a short period could i? They said yes thats fine as long as i informed them.
I went to see two financial advisors who both informed me that if i wanted to rent out for a period of time it should be OK and that 90% of people that rent out are on residential mortgages if i just change my forwarding adress. So i took out a mortgage with one these brokers
I didn't want to get a Buy To Let Mortgage as i was going to move in anyway after 6 months-1 year max and wasn't even sure if i would rent it out at all, i live with my mum and dad and just thought it would be a good time to get more money to save for nicer furniture.
Anyway i decided to let it out for a bit, i got a letter from my Mortgage company asking why the correspondance adress was different so i asked them for permission to let. I hadn't got their response by the time i had let the property out though.
I got a letter to say it was declined and if i wanted to let it i either had to repay mortgage in full or apply for buy to let mortgage and pay the penalties for early repayment.
So now i am stuck, they don't know i have let it out, i am stuck in a contract with the tenant for at least 5 months (with the break clause) and then i can move in. I don't know what my options are

Tell them, and your insurance company.

jonesMUFCforever

You claim to know nothing about mortgages but were savvy enough to ask whether you could let at application stage?
Pull the other one!

In my eyes you knew what you were doing - you have been caught out.

You need to ask Barclays to put you on a buy to let mortgage - if there are penalties so be it or you get the tenant out - if they sue you pay up.
Either way it is going to cost you.

somethingcorporate

It's a funny old world this consent to let business, our mortgage company wanted a signed AST before granting consent, not sure what they would have expected had they gone on to decline it.

I'd follow the advice in post 2. Treat your tenants well, fulfil your landlord obligations and keep your head down. Not great that you are breaking the terms of your mortgage agreement but they are only suffering a minor loss I doubt they would pursue you for even if they know what you are doing.

[Deleted User]

we rented out our home for a year in the 90s informed the lender who for the 12 month period charged an additional 2%,you also need to inform your insurers plus a 100 other things now

JakeGreen

Yep I forgot the insurance. You'll probably need a new insurance policy.

izools

You will definitely need landlord buildings insurance.

If anything serious happens to the house though e.g. a serious fire expect the insurance company to find out that you didn't have permission to let and then you'll be in a whole mess of trouble - e.g. criminal fraud.

If I were in your situation I'd negotiate with the tennants that they move out, accept whatever penalty you have to pay them, and move in yourself.

You should never assume you will get permission to let on a residential mortgage, especially as a new customer and / or a customer with a high LTV.