Changing mortgage so that we can let

snowb

Hello
My boyfriend wants to rent out his apartment which he has previously lived in as he has moved in with me.

We were advised he should inform his mortgage company before doing this. Which he has done (Abbey) and they say they want approx £600 admin fee to change the mortgage to allow it to be let out as the current mortgage only allows for owner/occupier mortgage.

The mortgage will stay at the same rate (its a tracker (?) mortgage) until next summer but when he re-mortages at this stage he needs to get a buy-to-let rate (which is more expensive??)

Any advise would be appreciated on this? SHould he not tell the mortgage company? Or is there a way to get around this admin fee? What does everyone else do that rents their apartment and do you have to get the buy-to-let mortgage?

Sorry for all the Q's but..... HELP!!!!!

Thanks
s

yatest5

I'm with Abbey on a Fixed Rate.... informed them I wanted to let and was worried they would want me to pay more...

But they just wanted to assess that I would still be able to pay the mortgage and just sent a form out I needed to sign. They still haven't sent it (this reminds me I should ring them AGAIN tomorrow) but I did ask on the phone and they said there is no problem...

The guy at the department for this said basically so long as you haven't had any issues with late / missed payments in the past it is no problem.

I guess it's *possible* some mortgages with special deals stop you letting, but I don't see why it would be - so long as the lender is at no greater risk of not getting paid they should be happy...

Oh, and just to say I would not recommend just hiding from the problem . Even if its 600 quid that only 1 or 2 months rent...

Gorgeous_George

Hi snowb and welcome to the site.

Before going down this route it is vital that all aspects of BTL are considered.

Your bf will need to complete a tax return with 'Land and Property pages' to declare his rental income even if he does not make a profit. You cannot guarantee getting 12 months' rent every year. Typically, 11 months is more likely.

Your bf needs to pay for buildings insurance. Personally, I have LL's cover which includes lossof rent under certain circumstances. I doubt I'll ever claim because of the risk of higher premiums.

Not all tenants will look after your property as you might wish. Some will resent your bf's BTL empire and will cause all sorts of problems that you would not expect.

The question has to be 'Why does he not sell and then move onto your mortgage?'. I know there are loads of reasons why this may not be practical/desireable.

Apologies if this is a bit off topic but there's more to BTL than paying Abbey £600.



GG

yatest5

Option 1

BF sells, pockets 20 grand (or whatever)

Option 2

BF rents, ends up costing him 1000 a year in costs for 20 years. After 20 years, he has an asset worth 150,000 at todays prices and god knows what in 20 years. Outlay was 20,000.

What am I missing (not trying to be smart, seriously, what am I missing )

noyk

Option 3

BF lets, ends up costing him 1000 a year and increasing, in costs for 20 years (god knows what a a plumber will cost in 20 years). Market subsides over the long term due to the baby boomers selling up and dying and thus population decreasing. Asset worth sod all, liability quite a lot.

smart !!!

snowb

I am confused, why is everyone so anti-letting? Surely, is it good to have an investment? Especially as the property is in an area of London where both rent and selling prices are constantly rising?

keeperbear

snowb wrote: »

I am confused, why is everyone so anti-letting? Surely, is it good to have an investment? Especially as the property is in an area of London where both rent and selling prices are constantly rising?

Ignore these idiots. Most posters in this forum are anti-BTL and anti-property owners with equity.

London is a different market to the rest of the UK. The Olympics should boost your property price until 2012, and as long as Polish immigration keeps going you will have tenants. Whilst I am in West London, I see London property increasing for the forseeable future. In my area, there are more tenants than there are properties. You BF should not sell and should rent out. Try it for a year and see what happens. What does he have to lose? I suspect his property will be worth more in one year.

As for the telling the mortgage company. If it just a trial period why tell them? Many people don't tell the lender. Realistically, what can the mortgage lender do? They could find out, charge you £600 and tell you off etc.

keeperbear

noyk wrote: »

Option 3

BF lets, ends up costing him 1000 a year and increasing, in costs for 20 years (god knows what a a plumber will cost in 20 years). Market subsides over the long term due to the baby boomers selling up and dying and thus population decreasing. Asset worth sod all, liability quite a lot.

smart !!!

What utter tosh! If a plumber costs more, tenants will have to pay more rent if the property needs constant repair. If other property costs increase, so will rental. Rent payments will increase with inflation so liabilities do not increase. Have you thought of this Einstein?

"An asset worth sod all" in the future? We are talking about London. I bet you £100 that the OP's property will be worth more in 20 years time. Care to take the bet? I bet you won't.

keeperbear

yatest5 wrote: »

What am I missing (not trying to be smart, seriously, what am I missing )

Any sort of logic or explanation? How much is the property currently worth? How much is rental in the area? How much equity does the OP have? I could go on.

noyk

Another touchy "property investor" eh?

It may cost more in £'s (that's our monetary system for you) but whether it will be "worth" is a different question. Average house price relative to the average wage i'd take the bet

Gorgeous_George

I'm certainly not anti-BTL as I have one property currently let out. I just think the negative aspects need to be considered with the positive ones.

What happens if London becomes a serious target for terrorists? OK, I concede the risk may be small but the impact could be huge. If we have a housing crash nationwide that sees property fall be 40%, London will be hit too.

If you are confident that you are right and have considered the risks, go for it. There won't be anyone to sue if it goes wrong.

Good luck.



GG