Consent to lease / fixed rate issue

MattShep

Hi,

I took a mortgage out with the Halifax a few years ago, took a fixed rate term for 4 years. At the beginning of the 3rd year I moved in with my girlfriend and leased out my property. I applied for the consent to lease and all was well.

Now however my fixed rate is coming to an end on the 31st. I phone halifax to set myself up onto a new product, only to be told they cannot change rates while offering consent to lease and upon the 31st I will automatically be moved to a variable rate.

I contested and said surely this cant be correct? Why am I being forced onto a variable rate? Again I was told it is within the terms that I cannot change rates while under consent to lease. (at which I pointed, unless of course its for me to be put onto a variable?)

Is this really the case? I had no intention of moving to a variable rate nor do I wish to. I appreciate the math behind fixed rate mortgages and more often than not, end up costing you more, but I really value that security.

Any help would be greatly appreciated

kingstreet

Your mortgage is rolling on to its "natural" follow-on rate.

The usual alternative is a three year fix at 5.49% with £999 fee in return for continued consent to let. That may follow at the expiry of your current consent.

You don't get the usual residential rates while letting.

MattShep

Hi Kingstreet,

Thank you. I did press for an alternative but they insisted they do not offer products while consent to lease is in effect because the rate cannot change? Is this actually the case, that all landlords have to run on a variable rate? Maybe this isn't anywhere near as big a deal as I'm making it out to be. However I would really prefer to be on a fixed rate.

caprikid1

If you are not happy shop around and remortage. There are plenty of offers around for Landlords but not residential rates with high Fee's.

MattShep

The first thing I did after getting off the phone was check google to do just that. I couldn't really dig up much info on it actually, the searches mostly return "re-mortgaging" as in taking out a second mortgage on the existing.

I suppose I can just call up some of the major banks and discuss it. What are the likely cost implications? I would have preferred to stay with Halifax because I also bank with them but I will have to weigh up my options.

kingstreet

MattShep wrote: »

Hi Kingstreet,

Thank you. I did press for an alternative but they insisted they do not offer products while consent to lease is in effect because the rate cannot change? Is this actually the case, that all landlords have to run on a variable rate? Maybe this isn't anywhere near as big a deal as I'm making it out to be. However I would really prefer to be on a fixed rate.

Unless policy has changed, you were always forced onto the three year fix once your current deal ended.

I've heard they are leaving people on SVR now, but don't know for how long, or if indefinite.

kingstreet

MattShep wrote: »

The first thing I did after getting off the phone was check google to do just that. I couldn't really dig up much info on it actually, the searches mostly return "re-mortgaging" as in taking out a second mortgage on the existing.

Remortgaging is moving your mortgage from one lender to another while remaining in the same property.

Borrowing more money is additional borrowing, unless from a different lender leaving the first mortgage in place, then it's a second charge, or secured loan.

In your case, you're looking for a buy to let remortgage as you no longer live in the property.

MattShep

Thank you very much for taking the time to reply.

I will do some research and weigh up the pros and cons of remortgaging.

I do find it odd why Halifax wouldn't give their customers the choice as to how they re-pay their mortgage. But I can only assume landlords are happy with the lack of choice, otherwise Halifax wouldn't still be doing it.

kingstreet

MattShep wrote: »

Thank you very much for taking the time to reply.

I will do some research and weigh up the pros and cons of remortgaging.

I do find it odd why Halifax wouldn't give their customers the choice as to how they re-pay their mortgage. But I can only assume landlords are happy with the lack of choice, otherwise Halifax wouldn't still be doing it.

Consent to let is designed to be a temporary measure for "accidental" landlords. It is not designed for long-term letting.

If you want a Buy To Let mortgage, there are specific products offered for such business.

These can also be "interest-only" which is all but finished now for residential business.

Dave_Ham

I think you are missing a salient point, they will subject to detail offer you a fixed at circa 5.5%.

Landlords (aside from accidental landlords) typically would not be using Halifax residential mortgages although as stated fees are higher with buy to let's.

Sorry it is not what you expected, although in fairness to Halifax you changed the goalposts by going from your home to an investment and they are not alone now with how other lenders are treating this and some would not even grant consent or allow you to see out the fixed term.

Good luck