Hoping for advice...

Blue_Bird

Hi

I'm looking for some advice for a friend (genuinely!) regarding his mortgage. The following is what I know..

Bought house sometime in 2003/4 (Northern Rock no deposit mortgage) @ 70k
Remortgaged at some point, current mortgage outstanding around 88k, house valued around the same.

For certain reasons he is not living there, he is looking to live there long term but not in the next few years.

The House is currently on informal rental agreement (his friend lives there, and the rent doesn't cover the mortgage).

He has recently read something that has worried him to do with it being mortgage fraud to be doing this - is this right?
He is worried about insurances being invalid and the main thing - what will happen when he comes to remortgage? (I think he needs consent to let?)

I think his LTV will mean he won't be able to get another mortgage as they don't do 100% ones, so he will be forced to remain on the variable rate, is this right? And getting a buy to let mortgage would be even more difficult?
I think his only option is to sell the house, but is there another (legal) way around it? Would it be better getting a longer/shorter term mortgage when it's due - ie would either of these help if he is happy to do them?

I think the question is, is there a feasible way to convert this to a legitimate arrangement so he doesn't worry about it?

Thanks for any help in advance

Blue

R_P_W

If he is renting it out he really needs to apply for consent to let. They may or may not grant this and there may be an increase in interest rates.

If he has no equity in the property he will not be able to convert to a buy to let mortgage. You need 25% deposit/equity for BTL normally.

Very if not zero options to remortgage with no equity. Shorter term will mean a higher payment.

Blue_Bird

Thanks for the reply RPW.

Is there a reason why consent to let would be refused?

It would seem that his only option in that case would be to revert to living there, as in come back once every few weeks to make sure the insurance is valid? That's the only way I can see round it I suppose. Would he need consent to let if he does this and has his friend as a lodger?

Thanks

Blue

R_P_W

No you don't need it if he is living at the property. He would have to live there, I.e. I don't think visiting the property once a month will cut it!

A lender can refuse consent to let, it isn't your right to let the property. Some may refuse because it increases their risk as a lender.

If it at the moment he is renting the property to a friend then he is likely in breach of his mortgage terms and conditions. What this means in reality - well different people on here will have different views. Personally it isn't something I would be doing or encourage others to do.