Can bank make use change to a buy to let mortgage

Hadley

My husband has moved with his job for a short period of time (1 1/2 years)so our house will be empty we have some one who wants to rent the house for this period after which we would move back in .My husband contacted the mortgage company to let them know what was happening and to obtain a letter saying we could let it out. We have lived in the property for ten years and it is our family home we never bought with a view to letting it out.
The mortgage company has told us we would have to change our mortgage to a buy to let one that would mean our mortgage would double for the amount of time we are renting out our house and it would also mean the interest rate would be greatly increased for the term of our mortgage which would mean for renting out our house for a short period would end up costing is well over £15,000 also our mortgage says the house can not be left empty we are in a catch 22.Does anyone know if they can make us switch mortgages.Thanks in advance

Fire_Fox

Some lenders offer consent to lease but not all, and you are not guaranteed to be accepted. You applied for a residential mortgage, if you are no longer resident they can insist you change your mortgage product.

HB58

Yes, I'm afraid they can do this. You will have changed the use to which the house is put so are no longer entitled to the same mortgage. Some companies just give 'consent to let', some charge a little more, some - like yours - charge very much more.

Hadley

thanks for the replies looks like we will leave it empty then and just use it for visits home.

florence4

I'm no expert, but they probably can. I guess it's up to any lender to set their own terms.

However, I think you probably have a couple of other options. Firstly, there's something called 'consent to let', which is (as I understand it) for temporary rental arrangements, just like yours. The rates should be better - closer to your current residential rate, though some lenders do charge extra. It's definitely worth asking your lender if they'd consider this, rather than a BTL mortgage.

Secondly, since you've been with your current lender 10 years, you're probably not 'tied' to them any more, and could shift elsewhere. As far as I can gather (I asked a similar question here a week or two ago) a new lender is very unlikely to give you a residential mortgage and then consent to let it within 6 months, so you would need to go with a BTL mortgage. But a new lender might well have deals which are better than the rates your current lender would offer you - you ought to be able to get a 2 year fixed rate around 3.5%.

But I don't quite understand why you say it would cost you £15K. It is a condition of most BTL mortgages that you should be able to get rent which is 125% of the monthly payments - e.g. if your new mortgage will cost you £400/mth, then you need to be able to get rent of £500/mth. So unless you're planning to let someone stay in your house for free, your mortgage payments should be met by rent. Other fees like BTL arrangement fees, insurance and maintenance are tax deductible.

Werdnal

You would also need to change you insurance as most household policies require you live there yourselves, then abide by all the legal requirements and obligations of being a landlord - Gas safety check, EPC, deposit protection etc, plus declaring your rental income for tax.

If you are going to forget letting and leave the property empty, you must still advise both mortgage and insurance, as many have clauses against the property being vacant for any length of time.

G_M

As others have said, differentlenders have different policies. But

Hadley wrote: »

...The mortgage company has told us we would have to change our mortgage to a buy to let one that would mean our mortgage would double for the amount of time we are renting out our house and it would also mean the interest rate would be greatly increased for the term of our mortgage which would mean for renting out our house for a short period would end up costing is well over £15,000 also our mortgage says the house can not be left empty we are in a catch 22.Does anyone know if they can make us switch mortgages.Thanks in advance

* I assume the mortgage does not double, the repayments do?

* Double seems unlikely. eg
Take (say) a 400K loan with 15 years left. At 3% (now?) repayments are £2762 per month. If the interest rises to 7% (BTL) the repayments are £3595. No where near double.

* interest rate will not be increased for the term - when you move back in 1.5 years, you apply for a domestic mortgage again! (and in the unlikely event the lender refuses, you switch to a new lender.)

Yes, there are costs associated with letting (you have not mentioned tax, or agency fees, or....), but you have not done a realistic budget yet. Do one.

And read:

New Landlords (information for new or prospective landlords)

Hadley

We have a brilliant mortgage rate at the moment a product that is no longer available .While we were renting our mortgage payments would go up by 50% for the time we are renting and due to having to change the mortgage the payments would increase by a great deal because of the mortgage we have now is so good .
As for costs yes we have worked those out we would have been renting privately therefore no agents fees.Also the rental would not cover the new buy to let mortgage payments there would be a shortfall .So it looks like either being left empty or having a family member move in for free.