Got a wrong type of mortgage. What should we do?

Busybees123

We bought a second house by taking a standard mortgage against our first house. We planned to rent out the first house and move into the second one, as it is in a better area. You must know by now that we should not have done so. But our mortgage broker said this would be the best way to get a mortgage quickly. We did not want to lose the house, so needed money urgently and wanted to lower LTV (first house is higher in value). The broker convinced us that banks never check.

We completed the purchase and went to an estate agent, and found that there is a problem – we would need a consent to let from our lender in order to rent the first house, which they would not possibly do. We contacted the broker for advice but he just said to us “I thought you knew what you were doing”.

We knew we should not do it but never realized we would need a permission from a lender to let our house (It’s quite obvious but it never come across in our mind).

So now we are in a trouble – we can’t rent the first house out through an agent. Luckily the mortgage repayment is not large and we are ok for a while. But we can’t keep the situation forever. What should we do?

• Should we rent the house privately?
• Should we ask the lender for re-mortgaging (loan against the second house or change to buy-to-let?). We could give them a few reasons why we changed our mind yet I don’t know if they sound valid.
• Should we look for other lender for re-mortgaging?
• Should we tell the bank the truth and request for re-mortgaging?

Could anyone please advise.

kingstreet

Do you have to let through an agent?

Have you actually asked the lender for consent to let, or are you assuming it won't be granted?

Do you have landlord insurance or is your insurer thinking you are living in the property too?

TBH you should have been advised to take a let to buy product on your current home, as this is designed for your situation. A residential mortgage would have had lower fees and a lower rate but would leave you in this position.

Whatever you do, the broker's comment that you should effectively have known you were colluding together in committing mortgage fraud is completely unacceptable. However, it would now be difficult to take issue if you have allowed the mortgage to complete as you are equally culpable, although I can't guess at the implications you might face.

Busybees123

Thanks for response.
We don't really need let through agent. It would be less hassle and we prefer that way.
We have not asked our lender for consent to let, just assuming.
We have not moved yet so have not changed insurance on the first house. If we try to get landlord insurance, don't they check our mortgage?

We did not know the consent to let is required so underestimated the risk.

Now we are thinking to make it right and want to be equipped with some knowledge, so we can make a right decision.

kingstreet

In terms of options, you have three;-

ask the lender for consent to let

let without an agent, without consent

remortgage to a new lender onto a let to buy product.

You need to get further professional advice, of a more ethical nature now.

pjread

Was your conveyancer completely aware of the situation?? If so I would have expected them to highlight this to you. Honestly, IMHO there are only two real options;
1/ let the 'new' house instead for a while...
2/ request consent to let, be prepared that it may cost you

I'm guessing you're in a scenario where there would be early repayment charges to actually change the mortgage at this stage. What's the scenario with the broker you used? If you were misled perhaps there is some come back here, though it is you that signed the agreements so maybe that's a dangerous route to take especially if it was clear this was not legitimate (the MA's on here will undoubtably know more than I on whether this is feasible)

I guess sell the 'old' house and clear the mortgage is something else that should probably be mentioned as an option.

Wh05apk

The letting agent would not need to see consent to let, it is not their concern whether you have the correct mortgage, or even if you have a mortgage.

Thrugelmir

Wh05apk wrote: »

The letting agent would not need to see consent to let, it is not their concern whether you have the correct mortgage,

Reputable agents may well ask. As it's the tenants that ultimately suffer by losing their home.

JPB123

Thrugelmir wrote: »

Reputable agents may well ask. As it's the tenants that ultimately suffer by losing their home.

Reputable agents? Isn't that an oxymoron

I am an Independent Mortgage Advisor


You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

Thrugelmir

JPB123 wrote: »

Reputable agents? Isn't that an oxymoron

No worse than the reputation of mortgage brokers a few years back.

Can't understand why not regulated better though. (Letting Agents that is. )

JPB123

Thrugelmir wrote: »

No worse than the reputation of mortgage brokers a few years back.

Can't understand why not regulated better though. (Letting Agents that is. )

Oh, right, so what was wrong with my patented "fag packet" fact find?


"Give me your name and date of birth and I'll make the rest up", er er er, sorry "Self-Cert it for you"

I am an Independent Mortgage Advisor


You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

Wh05apk

JPB123 wrote: »

fact find?

Whats a fact find?:D