Can somebody please help with my mortgage lender dilemma??

Shamzi71

Hi there,

I'm to be made redundant at the end of May. I've decided I really want to go to go university and study for the next 3 years to get qualified in something I actually want to do. I'm going to move in with my mum (yikes) and hopefully rent out my house which I only bought last year. I haven't told my lender any of this yet as I'm so scared as to what they'll do! Will they give me permission to let even though I've had the mortgage less than a year? Should I come clean about everything and tell them about the redundancy also or just make something up that doesn't give away my pending unemployment? The rent I can get for the house will more than cover the mortgage and I won't be paying anything at my mum's while I'm studying.
Can someone please advise me what to do??
Many thanks.

macarena123

Hi!

There are some other recent threads on this topic that I think are worth you checking out. But the bottom line is, if you don't get your lender's permission you are setting yourself up for a world of hurt

Your lender will most likely find out anyway, unless you are going to be remaining at that address on all your bills and correspondence. And if you rent it out w/out consent to let they can force you onto a BTL mortgage, pull the mortgage since you have broken your terms, and put a fraud marker against you.

So - NOT to be taken lightly.

Check out the other threads and and at the end of the day it's your choice . But I would advise coming clean to your lender and asking how they can help you. The consequences could be pretty dire if you don't

Shamzi71

Hi there macarena. Thank you so much for your reply. I am prepared to ask them for the consent to let, and to pay the extra, but it's telling them about the redundancy that I'm more concerned about. Would they even let me keep my mortgage if I'm studying? I just don't want to lose my house, I worked so hard to get it, and being almost 42 I'm so worried about stepping off the property ladder for fear I might never get back on again. Could you give me links to the other threads?

macarena123

Check this out (I can't post a full link yet so remove the spaces in the link)

h ttp:// forums.moneysavingexpert.com/ showthread.php? t=4533773

I wouldn't stress that much about telling them about the redundancy - they can't pull your mortgage just because your employment circumstances have changed, as long as you can keep up the payments. That would only be an issue if you were remortgaging when you have to go through the application process again - you've done nothing wrong, and nothing to break the terns of your mortgage just because you've been made redundant.

And it happens all the time, unfortunately, so you are not unique here - they've heard it all before.

What you do need to do is come up with a plan for how you will support yourself at Uni - and that includes getting your lender's OK on renting your property out. If they nix it, you may have to come up with an alternative/defer your plans

So, don't give up hope - you may be able to work something out. Sorry to hear about your redundancy and all the best in your future plan!

Yorkie1

Which lender is it?

What is the property worth? How much is outstanding?

Do you know what the likely rent will be?

Do you have the financial resources to deal with the situation where the tenants stop paying as soon as they get in, and/or trash the place?

Have you factored in all the other costs? (LL's gas safety certificate, LL's insurance, tax, for starters?). Will you manage it yourself or engage an agent to do any of it?

Shamzi71

Hi Yorkie

I've got an interest only mortgage with the Nationwide, so the whole amount is outstanding. I'm still within my 2 year fixed period. I have done some research and should get almost double the amount of the mortgage payment in rent.

The whole house has just been refurbished so I have all my gas and electricity safety certificates. Doesn't landlord's insurance cover non payment of rent and all that? I would get an online agent to initially check references and draw up the agreement but would then manage it myself.

So macarena, are you saying you think I should tell them about the redundancy and the going to college plan?

macarena123

well, I wouldn't volunteer it off the bat with no reason (none of their business tbh, as long as you are making your payments).

But if you need to disclose it while talking over your options, I wouldn't be scared of what they'll do.

When you're looking at rental income, bear in mind your lender may (will) make you take out a BTL mortgage if you were eligible which will be more expensive. Which is why I was saying you need to talk to them when working out your finances to determine if this is even feasible.

Bottom line is there are two different things you are talking about here:
- Redundancy: not an issue, as long as you are solvent. That is your personal affair.
- Renting your property, which is a business decision that you need your lender's buy in for.

Meant to add: the key thing about keeping these two things separate is that being redundant should not affect your current mortgage. How it might affect your chances of getting a BTL I can't say. But those are generally calculated on deposit size and rental yield - how far your personal income will play in I am not sure.

lawriejones1

The fact that you only have an interest-only mortgage is also somewhat of a concern. Without being too rude, do you have a plan to generate the capital to actually pay off the mortgage sometime in the future? At 42 (and with a 25 year mortgage I assume) you're going to be 67 when it ends, and employment is likely to be difficult to find (unless you're training to be a lawyer, accountant or medical practitioner).

Owning a house is obviously great, but it's not the end of the world if you're not.

Shamzi71

Hey Lawrie. I will actually be training in the medical field, and at the moment there are loads of jobs around so I'm hoping it'll be the same when I qualify. I was only planning to be on the interest only until next year when my fixed term was up then I was going to switch to a repayment. I won't be able to do that now, so I guess when I'm back in employment I'll just have to buy somewhere smaller with the money I make from the house so as to reduce my payments. Thanks for all your help!

olly300

Shamzi71 wrote: »

. I won't be able to do that now, so I guess when I'm back in employment I'll just have to buy somewhere smaller with the money I make from the house so as to reduce my payments. Thanks for all your help!

Not necessarily.

When you are in employment after 3 years if the employment is in the same area and you decide to move back in then you can switch to a repayment mortgage and have a decreased term.

At the moment if you do rent out your property and whether your are forced to change to a BTL mortgage or not, you don't lose anything from having an interest only deal. The reason for that is only the interest is tax deductible.

The key thing is for you to be sensible in your future decision making.