Nationwide - Consent To Lease - Family...

gadgetboy00

Dear all,

I am looking to move property.

My current property is mortgaged with Nationwide on their Base Mortgage Rate (BMR) product.

I wish to rent the current property and have been looking over their consent to lease form.

I really grudge the additional 1.5% rate they apply when you obtain consent to lease.

I have been considering letting the property to my brother.

I queried this with Nationwide and they said there would be no additional interest rate when renting to family.

Q. 16 of the form is as follows...

Will you be renting your property to a family member? Yes / No
If yes, is there a formal tenancy agreement in place or will you be making a profit?

They have advised that if the above is the case then they will not levy the additional 1.5% interest fee.

It does not explicity say they wont!

Here is a link to the form.

http://www.nationwide.co.uk/NR/rdonlyres/A32F2127-7F0B-4721-9DE9-7C2FA6BFA04F/0/M30_Permission_to_Let.pdf

Look forward to your advice.

anselld

Bear in mind that nil profit will still leave you to pay the capital repayment element of the mortgage yourself since only the interest element is an allowable expense.
You would probably still be better off paying the extra 1.5% and renting out at full market value.

gadgetboy00

I dont really understand your reply...

My mortgage payment is currently £606 pcm. If I obtain consent to lease then they add 1.5% to the rate i.e. currently 2.5% to 4% and this in turn increases the mortgage payment to £785 pcm.

From what I can gather if we rent to family the mortgage will remain at £606. I am not interested in making profit - I just want the payment covered.

Apparently the property would rent for £900 pcm. However the letting agent would be charging 10% i.e £90 pcm. So this immediately becomes £810 and doesnt seem so worth it. Then there is preparing the property for rent, void periods etc etc.

My brother is living with my dad and can move at any time. So we move out and he moves in.

He pays us £606 and the mortgage is covered.

Is it not that simple?

Can you mock up an example of how I would be better off paying the 1.5% and renting out at full market value?

G_M

What will you do if your brother loses his job or similar and cannot pay the rent.

Will you evict him? What will that do to family relations?

Or let him stay. What will that do to your mortgage?

Think long and hard before letting to family - you are mixing business and family.

New Landlords (general information for new or prospective landlords)

MrRee_2

Yes, agree, think long and hard ...... will you evict if he loses his ability to pay? How will you pay for mortgage with a non paying tenant? Not sure about getting benefits if the landlord is a family member? What about when you want to sell with your brother in residence?

Risky mixing such a large investment with family .... so much can go wrong.