Trying to figure out Consent to Let. Help?

garygibsonsf

I'm moving abroad at the start of next year, if not before, so I'm going to rent my house out. It seemed like a good time as well to switch from an interest only to a repayment mortgage with the historically low interest rates.

I called Lloyds TSB (mortgage provider) about consent to let today and they told me that since an earlier query of mine (when they suggested holding off until just before I'm actually going abroad), the terms and conditions have changed and if I'm letting the place out the interest rate I pay will be higher.

By how much? They wouldn't tell me unless I proceeded to apply for consent to let over the phone.

This worries me hugely. I've been stuck with an interest only mortgage for ten years (long story) and only just got out of it a few months ago, so obviously I want to switch to repayment, take advantage of low interest rates and let a rental agency take care of the house while I'm away. Does anyone know just how much extra interest someone like Lloyds TSB are tacking on these days?

I work as a freelance writer, on a typically variable income. I'm afraid if it was expensive enough, even with prospective tenants, I might have difficulty covering the cost of the repayment deal and be forced to stick with the interest only, particularly when you consider my wife and I need to find somewhere to rent abroad (Taiwan).

If anyone can tell me how much extra I can expect to pay based on their experience, I'd be grateful. I'm currently on an interest only mortgage at 2.5% based on a loan of 67,000.

BitterAndTwisted

How much is the property worth? It's not a given that any lender would give consent-to-let, never mnd to a borrower who is going to be living outsde the UK for some time. They all have their varying charges, which could be an annual fee or an increase in interest-rate, or no consent at all depending on what day of the week you ask them and your individual circumstances.

I'm assuming that you're going to look into the consequences of being a non-resident landlord

kingstreet

LBG normally grants three year consent, in return for a three year fixed rate at 5.49% with £999 fee.

That's the Halifax way and I'm pretty sure it's now LBG policy as a whole.

Gary_Gibson

kingstreet wrote: »

LBG normally grants three year consent, in return for a three year fixed rate at 5.49% with £999 fee.

That's the Halifax way and I'm pretty sure it's now LBG policy as a whole.

If it really turned out to be that much I'd be totally screwed. I don't know if I could afford that. Don't they want us to be able to repay our mortgages?

The previous commenter asked how much the loan was - 67,000, I think, or very close. Maybe 62,000.

BitterAndTwisted

I didn't ask what the mortgage was, I asked what the current valuation is.

What research have you done to investigate what the local monthly rent might be for similar properties?

Annisele

Are you sure you wouldn't rather just sell the place, given the costs and risks of becoming a landlord? G_M has a mammoth post with information for new and prospective landlords.

If you couldn't afford to proceed on an interest rate of 5.49%, you might not actually be able to afford to let the place.

Gary_Gibson

BitterAndTwisted wrote: »

I didn't ask what the mortgage was, I asked what the current valuation is.

What research have you done to investigate what the local monthly rent might be for similar properties?

I had someone round from a local rental agency who said they figured they could get £430-450 a month for it. I think the current valuation is still pretty much the same. Property prices haven't greatly shifted where I live in ten years.

Edit: Actually, I just jumped on Zoopla and typed in my address. It gave me a valuation of £81,128, and that average property prices in my area are £79,156. However, whether I would actually get that much is another question.

Someone asked why I don't just sell the place - well, my income plummeted post-crash a few years after I got my mortgage, and even though I do well enough nowadays my present income wouldn't get me another mortgage.

Thrugelmir

Gary_Gibson wrote: »

even though I do well enough nowadays my present income wouldn't get me another mortgage.

Can you afford the risk of the tenant not paying the rent or having a void period. While you are living half way round the world.

Gary_Gibson

Thrugelmir wrote: »

Can you afford the risk of the tenant not paying the rent or having a void period. While you are living half way round the world.

I don't have the details to hand, but according to the (ARLA registered) rental agency I contacted about taking care of it all, fo an extra monthly fee I get insurance against void periods. I'd have to check the T&C, though. In fact, I will later tonight, so thanks for making me think about that.

Werdnal

Gary_Gibson wrote: »

I don't have the details to hand, but according to the (ARLA registered) rental agency I contacted about taking care of it all, fo an extra monthly fee I get insurance against void periods. I'd have to check the T&C, though. In fact, I will later tonight, so thanks for making me think about that.

That sounds like a guaranteed rent scheme, and there are various horror stories about them too!

Here is a recent one over on LLZ:

http://www.landlordzone.co.uk/forums/showthread.php?57070-more-rights-for-landlords

Guaranteed rent through the void periods means agents will sign up the first tenant that comes along, just to "avoid the void" - they don't want to pay you if no rent is actually coming in. You will also find you usually sign over the property for them to control and rent out, rather than actually finding you tenants. You want a deal where they "manage" the property on your behalf, not act as your "tenant" and sublet to whoever knocks on the door with enough cash in their pocket for the deposit and first month's rent. As long as tenants is paying their rent, they won't care about anything else!

Gary_Gibson

That's an interesting point. I've got a bunch of flyers from them and I'll check that out. Some friends of ours used them starting from six months ago and don't seem to have had any problems. But better sure than worried.