Consent to let mortgage

bubblepop_2

We've been trying to sell our flat for the past year with no luck so are looking into renting it as we do have some money to put down on a new mortgage.
HSBC, who we have our mortgage with, have said consent to let would be no problem - they'd give us permission for 12 months at which point we'd need to reapply again. Are they likely to renew or will they then try to get us onto buy to let? As the flat has lost value since we bought it, the LTV is currently about 85% and I'm worried about getting a BTL mortgage on that rate.
Also, we've just reverted to the standard variable rate - would it make a difference if we fixed before sorting the consent to let i.e would they let us see out the term?

ACG

I cant answer the second part of your question, HSBC would be the best people to ask.

With regards to the first bit, you cant get a consent to let mortgage. You have the choice of residential and requesting consent to let from the lender or getting a buy to let mortgage.

It comes down to the lender whether they will give consent to let, and what their fees are for doing it (some load the rate, some charge a fee, some do both). Most lenders will not offer Consent to let with 6-12 months of moving to them. When i worked for a bank it was frowned upon if the applicant requested CTL straight away and always declined.

At 85% LTV i dont think you will get a BTL mortgage anyway so i think your only option is to take HSBC up on their offer.

brit1234

Are consent to let mortgages usually about 1% higher interest rates?

Your going to have to be prepared to sell after the year or put equity into it when it turns to the higher buy to let rate.

bubblepop_2

We don't want to change to a new lender as I know we couldn't ask for CTL straight away.

HSBC have said there'd be no charge to get consent to let - I suppose I'm just trying to anticipate what they'll say after the year. If the option is to sell, is putting it on the market whilst its still being rented enough? The ultimate goal is, of course, to sell the property - the flat market is just dire at the moment.

HAMISH_MCTAVISH

bubblepop wrote: »

HSBC have said there'd be no charge to get consent to let - I suppose I'm just trying to anticipate what they'll say after the year. .

Good to hear HSBC are being reasonable about it.

CTL used to be granted as a matter of course from most lenders, with only minimum admin charges, however the lending industry has now figured out it's another cash cow to be milked and they're doing so with a vengeance.

If they've granted it for a year, you might be able to get another year out of them, but after that they'd probably want to change you to a BTL mortgage if it becomes clear you're never going to move back in.

There have been some cases previously posted of lenders switching CTL to BTL without putting in more equity, after all, they are getting more money out of you so it's usually in their interests to do so. The risk is that the rate you're offered may not be as good as being able to shop around with more equity.

Of course, with house prices also now rising and that trend looking to accelerate as mortgage rationing eases for FTB-s, over the next couple of years it's entirely possible your current 85% LTV may well become 75% LTV or even lower.

I'd take the CTL for now.

Chances are good the situation will only improve over the next 2 years.