How easy to let entire property if I lose job?

PanicPlan

Hi,

I'm a FTB (single guy, okay paying job in London) currently in the process of buying my first place, a 2 bed flat in south london. All going as planned, mortgage approved, not exchanged yet but no reason it won't all go through. I'm looking at planning for disasters, in this case job loss.

My disaster plan has always been to let the entire property should I lose my job and move back to my parents home until I get back on my feet. I know that my mortgage lender - Nationwide - would charge an additional 1.5% interest if I decide to let the whole property.

However, will Nationwide/lenders allow me to let the entire property if I need to because I 've lost my job? Or is this something I can only do whilst still employed? In which case my plan won't work.

I have a feeling the answer is going to be no, they won't let me let it. Any advise/ knowledge on this?

Thanks you in advance everyone,

John.

kingstreet

AFAIK it's exactly the same.

Want, or need, they offer CTL at a 1.5% loading after six months.

Thrugelmir

If in doubt don't exchange. There's always another day.

dotdash79

Is your job at risk? or is this worst case stuff?

If it's the first don't exchange, if it's the second then try not to worry about it.

suse*

I would not assume you can switch to get permission to let that easily. I thought the same when I first bought my house, but thanks to the resession and negative equity, as well they changed the rules from when I first took out the mortgage. They said I could pay a 1500 application fee for one years permission to let, but they advised me not to even try due to the negative equity etc I would be wasting my time as the rent wouldn't cover the mortgage with a large enough buffer. So if you did have to switch to a btl mortgage have you got the right ltv / rent % to do that?

Do you have income protection insurance, or some sort of 6 months emergency savings fund? If you were ill and were on ssp for 6 months do you still have a way to pay for your bills and mortgage? These are the sort of things you need to consider as if it is affordable or not.

Even if you can meet montly payments now when interest is so low, then a 5% interest rise with no income for 6 months what would be the plan. Would having a lodger be enough to still pay the mortgage or what would be your plan?

Parents aren't forever either which is a hard lesson to learn unfortunalty too.

Children can also appear when you don't expect them, and they aren't cheap from what I've heard.

I don't mean to sound morbid but I have lived through a lot of that in the past 7 years which I never released when I got my house, how many curve balls there would be all at once. So you need to have a plan b, c and d in mind now be that with insurances or savings etc to give yourself the best chance.

PanicPlan

Hi,

Thanks for all the replies.

This is worst-case stuff. Job is stable and not at risk and I'm in a 'good' position as a first time buyer. LTV is 70%, if that makes a difference.

I won't have income protection, which was to be my first line of defence. This is because I do occasional freelance outside of my normal job and this would apparently invalidate any protection as I'd still be "self employed" if I lost my 9-5, despite it being a tiny income that would definitely not cover the mortgage.

So I'm really back to 3 options should I lose a job, as far as I can tell:

1. Let entire property which should cover the mortgage, but can I? This is a huge thing for me.

2. Sell asap. I've got a decent amount of equity, but obviously I could lose a hell of a lot doing this (including a harsh penalty for breaking a 5 year fixed term mortgage I'm getting).

3. Give up additional saving/earning with freelance, so I qualify for mortgage protection. I would hate to do this, but if there's no other option, maybe I have to?

I know a million other things can go wrong, but I've saved hard for years to get a decent LTV and the prices are now outstripping any saving I can achieve. My fear is pulling out and going back to renting would mean a far worse situation later with all of the same worries.

It's a nightmare this property lark.

Owain_Moneysaver

4. If you lose your job, build up the freelance work and take a lodger in the spare bedroom. Is the room layout of the flat such that you could take two lodgers in the bedrooms and use the lounge as your bedroom, with everyone still having access to the kitchen/bathroom?

Check that the freeholder will allow lodgers or letting as sometimes there are restrictions.

Owain_Moneysaver

suse* wrote: »

Children can also appear when you don't expect them

Not after a vasectomy they don't usually.

PanicPlan

Thanks for the other advise/ideas guys,

Owain - sadly the layout isn't right for renting more than one room. Good idea though, I've rented places where that would have worked perfectly. The property is one large double and one single, so I'd move into the single to get more money for renting a room.

Questions to all - Given a 70% LTV, how likely is it that Nationwide (or lenders in general) would accept me wanting to let the entire place?

Would I have to tell them I've lost my job if I wanted to let it out? Or does it not matter as long as the mortgage payments continue? I guess I could just say I've chosen to leave and freelance full-time?

Thanks all

Mojisola

Take in a lodger as soon as you can - https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

A Mon-Fri or Sun-Thurs lodger is also possible if you want the place to yourself at the weekends.

Use the income to overpay the mortgage or stash it away in savings to help towards the mortgage payments if your job goes.

Prothet_of_Doom

It's a 2 bed flat, and your old room at your parents is free, so rent a room is your friend.

Start on day one, rent a room monday to friday, and put the money away in an account, and IF the SHTF use it to pay the mortgage.

London you say. Go on spareroom, and have a look at what people are renting out. You'll get £400 a month at least.