Consent to let charge, £1,250 per annum!!

alexanderalexander

thinkpositive1 wrote: »

I have just been given "consent to let" from my lovely mortgage company who then informed me the "admin fee / charge" would be £1,250.

I said "presumably this is a one-off" and they said "no, it will be an annual charge" assuming each year they have the decency to approve me letting out my house year on year.

Over £100 a month's cost and for what exactly?

Anyone been charged similar and / or know if there is a way of challenging this outrageous cost?

Have you finished your fixed period (or have a reasonable early repayment charge) on your current mortgage? Do you have at least 25% equity in the property? If the answer to both these questions is "yes" then you should look into what interest rates you could get by remortgaging to a buy-to-let mortgage, it might save you money....

thinkpositive1

theartfullodger wrote: »

You have asked for a very large loan for business purposes.

That is their offer: if you don't like it find another lender or another business area.

It's the market: part of the delights of capitalism.

Cheers!

Business loan???? Er no I haven't - well that's not my take on things. I took on a mortgage 8 years ago to buy my home; my personal circumstances have changed (now moving into partner's home); my house is in negative equity so there is no point selling it or indeed leaving it unoccupied - hence me looking to rent it out.

I don't see that as me asking for a very large loan for business purposes. The point is the mortgage company are doing very nicely out of me with my repayments (as is the case for other people repaying mortgages) and I thought it was pretty outrageous to be landed with a charge of this scale EVERY YEAR just for the priviledge of renting it out.

Easy money for them (they had to do what to earn it? sod all but it took them 9 weeks to deal with the application involving 3 follow-up requests for info letters) and they get this fee on top of what they get in interest each monmth from my mortgage. As portrayed as it was, as an "Admin Fee" I find it a joke to be charged that amount but I have no choice.

Thanks to others with their more "supportive" comments.

PaulLuke

I'm in a similar position but my fee is actually an uplift on the interest rate so is costing me just under 2400 per year. I'm thinking of looking at a proper BTL loan as this looks like this would be a better option, given I cold then transfer my original residential mortgage to my current property, which would give me a better rate than I'm currently paying.

BitterAndTwisted

thinkpositive1 wrote: »

Business loan???? Er no I haven't - well that's not my take on things. I took on a mortgage 8 years ago to buy my home; my personal circumstances have changed (now moving into partner's home); my house is in negative equity so there is no point selling it or indeed leaving it unoccupied - hence me looking to rent it out.

Your perception is sorely mistaken. The property no longer being your primary residence and now to be a letting business increases the lender's risk. Their annual charge reflects this.

I don't see that as me asking for a very large loan for business purposes. The point is the mortgage company are doing very nicely out of me with my repayments (as is the case for other people repaying mortgages) and I thought it was pretty outrageous to be landed with a charge of this scale EVERY YEAR just for the privilege of renting it out.

You're in negative equity, so this could be a very real worry to your lender. They have you over a barrel and are most likely aware of this fact.

Easy money for them (they had to do what to earn it? sod all but it took them 9 weeks to deal with the application involving 3 follow-up requests for info letters) and they get this fee on top of what they get in interest each month from my mortgage. As portrayed as it was, as an "Admin Fee" I find it a joke to be charged that amount but I have no choice.

Thanks to others with their more "supportive" comments.

You do have a choice: a number of them but some may not be palatable.

You continue to live in the property.

You sell at a loss and cover the negative equity with savings.

You accept that neither of those options are possible and pay their charges.




You are the party who is choosing to change the goal-posts, not your unfortunate lender.

By the way, you should be aware that consent-to-let is not an open-ended agreement, so you should get weaving on setting aside funds to cover that very nasty negative-equity if you haven't already. Depending on how much of a bath you've already taken, there's really not that much prospect of property-prices soaring in the short-to-medium term so you could only be just postponing the inevitable.

Sorry if my remarks aren't "supportive enough". For that, I suggest you go whining to your Mum.

Fire_Fox

thinkpositive1 wrote: »

Business loan???? Er no I haven't - well that's not my take on things. I took on a mortgage 8 years ago to buy my home; my personal circumstances have changed (now moving into partner's home); my house is in negative equity so there is no point selling it or indeed leaving it unoccupied - hence me looking to rent it out.

I don't see that as me asking for a very large loan for business purposes. The point is the mortgage company are doing very nicely out of me with my repayments (as is the case for other people repaying mortgages) and I thought it was pretty outrageous to be landed with a charge of this scale EVERY YEAR just for the priviledge of renting it out.

Easy money for them (they had to do what to earn it? sod all but it took them 9 weeks to deal with the application involving 3 follow-up requests for info letters) and they get this fee on top of what they get in interest each monmth from my mortgage. As portrayed as it was, as an "Admin Fee" I find it a joke to be charged that amount but I have no choice.

Thanks to others with their more "supportive" comments.

Artfullodger is a respected and highly knowledgeable member of MSE, you would do well to heed his posts. There is far more risk and hassle attached to CTL and BTL than to a residential mortgage, that is reflected in the costs passed on to the borrower. This goes double given you are in negative equity, the lender has no security.

Landlording is a profession and letting is a business, if you see it differently don't go into the industry. There are reams of legislation to comply with, tax returns to complete and so on. It's not a game for amateurs, the amount we are talking about in this thread could be the least of your losses if you mess this up - think being taken to court for three times the damage deposit, being accused of tax evasion, tenants refusing to pay rent whilst trashing the house and it taking months to evict them.

Brallaqueen

Just to reaffirm the point that if you rent your house out, no matter what the good reason for doing so, you are running a business. It can be really difficult to wrap you head around the fact that your home is now nothing more than an asset and that can really cause problems with people who don't think they need to research and properly plan as it isn't a buisness venture to them.

Now, I can understand why you want to do it but all the "I'm not in it as a business" in the world won't make a difference to how it is viewed by judges, banks and anyone else you may need to involve.

If you want to go ahead, take the fee as a signal that you should properly run and manage renting out your property. It is a business and it has costs, risks and obstreperous clients as much as any other.

kingstreet

Worth remembering.

Some expenses incurred in letting can be offset against the rental income for tax purposes to reduce the amount of tax you'll pay. Mortgage interest (but no part of the capital element) is one, the fee charged by the lender is another.

thinkpositive1

Cheery lot aren't you?

In all seriousness thank you all for words of wisdom and caution and advice.

Yes I posted out of frustration as it seemed an "unfair" charge to levy and I wanted to get advice on anyone having similar experiences and if I could question/challenge it. My mortgage broker thought it was extreme and should be about one tenth that costs...hence me coming on here to see what others had expereince on this. People have answered that - thanks.

I appreciate it is all about risk but (as was my case in point with the mortgage lender), having moved in with my partner, that letting out my home would be less of a risk as it will generate income that is entirely new - thereby making it more affordable an option having to meet the monthly mortgage payments in any case.

As for Bitter and Twisted's somewhat condescending comments then I guess you live up to your moniker. As for my mortgage lender being "unfortunate" I take it you jest? Business is business but they have done very well indeed out of the likes of me and others...my issue was the fact they were levying a (in my eyes) very high charge for actually doing very little "work". If it a measure of risk then in fact there is less risk to them as mentioned above (additional funds will be coming in therefore more stability and ability to pay the mortgage). Yes great advice about setting aside enough to plug the negative equity gap - nice in an ideal world to have all that extra cash swishing around but not all of us are in that position.

kingstreet

So, if they'd stuck you with a 1.5%pa rate hike, or forced you to accept a three year fix at 6%, would you feel better?

As a matter of interest, how big is the mortgage? Are you better off with this effective £104.16 per month loading, than you would be with Nationwide or Halifax, as above?

Purely curiosity here, by the way.

thinkpositive1

kingstreet wrote: »

So, if they'd stuck you with a 1.5%pa rate hike, or forced you to accept a three year fix at 6%, would you feel better?

As a matter of interest, how big is the mortgage? Are you better off with this effective £104.16 per month loading, than you would be with Nationwide or Halifax, as above?

Purely curiosity here, by the way.

Why, is that the norm - to add 1.5% to your mortgage rate?

Circa £200k.

I seem to be only 1 of 2 or 3 people here who think it's a right rip off and the rest seem happy to defend our wonderful mortgage and banking sector who are making up for the mistakes they made before.