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

Thrugelmir

thinkpositive1 wrote: »

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.

You applied for and got a residential mortgage. That's what the lender was selling. You were happy to accept their offer.

You now wish to amend the contract to commercial lending. The lender (for a number of reasons none related directly to you) does not particularly wish to offer this type of funding. However rather than saying an outright no, which it is within its rights to do. Has made you an offer.

Your choice is to accept or decline. Find a BTL mortgage elsewhere at a cheaper rate instead.

This is business , personal opinion doesn't come into this.

You are correct in one regard. The new management, proper bankers, are not repeating the mistakes of the credit boom decade. They are lending at commercially profitable rates that assess the risk fully.

ACG

Your broker is going to tell you what you want to hear so hes seen as the good guy.

Generally speaking, i see lenders increase the rate by around 1% and charge a 1 off admin fee of maybe £500-1000.

At the end of the day though, it doesnt matter what other lenders do its down to your lender.

You signed a contract stating it would be a residential property and your the one changing the terms - not the bank. They dont have to give consent to let, its entirely optional and it has been known for them to refuse it especially if your in negative equity.

You might not like it, but i would actually start blessing the fact your not with a stricter lender otherwise you might find yourself in an entirely different position.

I agree with you, its expensive but the bank is taking a higher risk as its not the homeowner living in the property, BTL mortgages are generally higher rates anyway so its probably just putting you in a similar boat if you were to take out a BTL (presuming you were not in negative equity).

Ive just done a quick search.
Presuming the property was worth £240k and the mortgage was £200k with 20 years remaining, the repayments would be around £1100 on a traditional mortgage or £1300 on a BTL - so its actually £200 a month more... and thats taking into account the property has £40k equity in it.

I know you wont like my post as such, but hopefully it gives you a bit of an insight as to why the lender is doing what theyre doing and how theyre not treating you as badly as you think?

thinkpositive1

ACG wrote: »

Your broker is going to tell you what you want to hear so hes seen as the good guy.

Generally speaking, i see lenders increase the rate by around 1% and charge a 1 off admin fee of maybe £500-1000.

At the end of the day though, it doesnt matter what other lenders do its down to your lender.

You signed a contract stating it would be a residential property and your the one changing the terms - not the bank. They dont have to give consent to let, its entirely optional and it has been known for them to refuse it especially if your in negative equity.

You might not like it, but i would actually start blessing the fact your not with a stricter lender otherwise you might find yourself in an entirely different position.

I agree with you, its expensive but the bank is taking a higher risk as its not the homeowner living in the property, BTL mortgages are generally higher rates anyway so its probably just putting you in a similar boat if you were to take out a BTL (presuming you were not in negative equity).

Ive just done a quick search.
Presuming the property was worth £240k and the mortgage was £200k with 20 years remaining, the repayments would be around £1100 on a traditional mortgage or £1300 on a BTL - so its actually £200 a month more... and thats taking into account the property has £40k equity in it.

I know you wont like my post as such, but hopefully it gives you a bit of an insight as to why the lender is doing what theyre doing and how theyre not treating you as badly as you think?

Thanks ACG - that is one of the more helpful replies - in trems of content and tone and appreciate what you're saying. Thanks.

kingstreet

thinkpositive1 wrote: »

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.

As mentioned, Nationwide adds 1.5%pa to your rate in return for CTL, while Halifax forces you onto a three year fix at 5.99% if you have moved onto its standard rates.

A 1.5% loading on a £200k mortgage would add £3,000 interest a year to the cost of the mortgage. £1,250 is not bad, by comparison.

I don't know your current rate, but I'd guess at 4.79% with NRAM? The Halifax would increase your rate by 1.2%, which would also see a sizeable £2,400 increase in your annual mortgage interest.

You are unfortunate in that some lenders make only a small charge for CTL while yours is higher. However, it's not all doom and gloom, as it is not as high as it could have been.

Assuming you are a higher rate taxpayer, £1,250 ends up at £750, after tax as this is an allowable expense and can be offset against the rental income.

Sponge

BitterAndTwisted wrote: »

For that, I suggest you go whining to your Mum.

I thought your post was well written, informative and helpful, without being too condescending - then you went and spoilt it.