Consent to let denied

sezzybell

Hi all, just wondering if anyone has any advice on my situation. I have lived in my flat for three years, never missed a payment and recently had another baby. This has led to very little space for us all and it's caused massive amounts of stress. We can't get a house yet as my partner has a bad credit rating and it will take another 2 years for his default to fall off. So we were hoping to rent out the flat and then in turn rent a house for us to all live in with a view to returning to the flat just before the fixed rate finishes in order to review our situation. I spoke to woolwich and the lady was helpful and said it all sounded fine but we have to complete a form which I did ASAP and sent off. Well anyway they have now come back and said that they won't grant the ctl as its an investment property?! Have they misinterpreted something on my form? I'll call them first thing in the morning but just wondering if anyone else has had this? Many thanks :-)

lisyloo

They are saying you can't rent it out on a cheap residential mortgage.
They want you to get a more expensive btl mortgage.
What's your LTV?

marksoton

From they're point of view of course it's an investment property. And you do not fit they're profile.

You'll have to hope another lender thinks otherwise.

sezzybell

Sorry lisyloo, I replied on my other thread that I moved here! Was 85%, now about 65/70% x

sezzybell

marksoton wrote: »

From they're point of view of course it's an investment property. And you do not fit they're profile.

You'll have to hope another lender thinks otherwise.

Hi mark, how do they warrant it as an investment property when I don't own any other property and I'll be worse off as a result? I'm doing this for my family and my sanity haha. Not to make money, thanks for replying.

lisyloo

They can "warrant" whatever they like when it's their money.
But In general residential mortgages are for homes that people live in. The interest rates are relatively low as the risk is low.
Investment mortgages are for properties people rent out.
I suspect they will say they will give you a btl mortgage at a higher rate.
You can plead your case, but I would expect them to say it's a btl.
By the way you will have to behave like a business as far as safety laws and tax laws are concerned, so you need to realise you are running a business here and you will have serious responsibilities towards other (like making sure no-one dies from carbon monoxide poisoning).
Sorry if this sounds harsh, but you seem to be regarding it not as a business and I can assure you that tenants will expect you to obey the laws with repairs and deposits and the tax man and mortgage company will treat you as a business.

Are you aware that things got worse tax wise for landlords in the recent budget?
Have you budgeted for mortgage costs, agency fees, contract fees, escrow fees, repairs, tax etc.? Btl doesn't stack up that well these days and it's quite a lot of work.

sezzybell

Thanks lisyloo. I am a qualified accountant so know the exact issues with tax/budget changes etc. I just didn't know where consent to let is acceptable or not! I guess they feel I don't fall within their criteria for which I don't understand when it's a temporary arrangement until my partner can be added and we an borrow more :-( I also hear that if I apply for a btl mortgage I'll have to pay my early repayment charge and pay an application fee - what a mess!

marksoton

sezzybell wrote: »

Hi mark, how do they warrant it as an investment property when I don't own any other property and I'll be worse off as a result? I'm doing this for my family and my sanity haha. Not to make money, thanks for replying.

Do i really need to fill in the blanks...

lisyloo

The risk associated with the debt has increased for the lender- you'll be paying rent plus you'll be liable for the rental mortgage out of your own income if you don't have a tenant.
This might not be likely but not being able to pay two lots is riskier that the current situation where you are only paying once.
Because you might have to pay double it's a riskier for the lender and that's why they want more money for your borrowings.
Hope that explains why it's higher risk.
It's unfortunate about the erc and fees I agree.

I would suggest you try and meet with them in person.
I'm not sure they gave much scope if any but if they do then presenting your genuine reasons might work.

Is there any way you can work out the space issues?

sezzybell

Thanks again ~ I'll go to them and see what happens form there. Cheers for giving me some actual advice rather than judging! X

lisyloo

Btw - if they are charging you for a brand new mortgage then you can get your btl mortgage anywhere.
I see no reason for you to be loyal to them if they are doing you no favours at all.