Remortgaging while unemployed

expl0rer

Hello, this is my first post on the forum and the issue in question is the reason I joined in the first place... but now that I'm registered I expect to contribute more

I bought a house nearly 2 years ago. At the time I was in full-time employment.

At some point I stopped working. Now I have lodgers in the house, which provide me with a rental income, which pays my mortgage, bills, food and other necessities, and leaves a little 'pocket money'. Not comparable to what I was making in my job, but I'm happier with my current combination of earnings and work-life balance than I've ever been. Suffice to say I have a life now! I'm not planning on getting a job in the foreseeable future.

The 2 year promotional rate on my mortgage is ending soon and I'll be automatically switched to the standard rate if I don't do anything. My mortgage payments would increase considerably. I'd still be able to afford them, but obviously I'd rather avoid the steep rise.

I'm researching my options for remortgaging to hopefully jump back on a promotional rate for another 2 years. From the lender's affordability POV it's only logical that if I can afford the higher rate, I could afford the promotional rate even more. However, if I apply with my current lender, it will bring their attention to my case and potentially put me in trouble, because:

* I'm renting out rooms without having asked their permission
* They gave me the mortgage on the basis that my employment situation was expected to continue

They may say I'm in breach of their T&C's and in the worst case scenario even reclaim the mortgage, which would be the end of the happy life I've worked so hard to build.

So it may be better to avoid them altogether.

If I go to a different lender, they may still not accept my lodger income. I reckon lodger income doesn't fit most lenders' standard templates and is considered less stable than employment, even if that's not true in my case (where I am it only takes a couple of days to find a replacement lodger, and I've never ever felt secure nor happy in any of the jobs I've had... I'd only consider getting a job as a very last resort).

So it would probably have to be a specialist / niche mortgage, which takes lodgers into account. And that would likely come with a higher interest rate.

Is it worth the effort? Is there any risk involved in applying to remortgage with a lender other than my current one?
It it worth exploring my options through a mortgage broker?

Or shall I continue to fly under my current lender's radar and be happy with what I have?

Any advice appreciated. Thanks!

kingstreet

You have no remortgage options.

You can only hope your existing lender has customer retention options available without further affordability or status checks that you can perhaps switch to online, without getting embroiled in the "advice" process by involving a human being.

AnotherJoe

What Kingstreet said, many lenders will offer retention products without the need for income checks, which absolutely is not the case if you go to a new lender who will do a full drains up, which is not what you want.
So if you post who your lender is, people here may know what is in offer and what checks will happen.

Pixie5740

Do you need to request permission from your lender to have excluded occupiers aka lodgers? The majority of lenders don't require it but you'll only find out if yours is one who does by reading the T&C.

Brock_and_Roll

I hope the OP is declaring to HMRC....otherwise this could very much end up in tears!

If I were the OP I would have a detailed Plan B and Plan C as I would expect that the current arrangements will either get rumbled or their will be no more special retention rates.

...and in any event what will the OP do when interest rates inevitably rise?

AnotherJoe

Raise the rent ?

expl0rer

My lender's terms are unclear about renting out rooms to lodgers.

After a bit of research I've found they don't do affordability checks when switching deals as long as it doesn't involve additional borrowing, and indeed I can do it online.

If the interest rates rise within reason, I should still be able to afford it.

And yes I am declaring my income to HMRC

AnotherJoe

expl0rer wrote: »

My lender's terms are unclear about renting out rooms to lodgers.

After a bit of research I've found they don't do affordability checks when switching deals as long as it doesn't involve additional borrowing, and indeed I can do it online.

If the interest rates rise within reason, I should still be able to afford it. My LTV at the moment is around 50% and I expect to repay my mortgage within 10 years.

And yes I am declaring my income to HMRC

This thread shows a happy conclusion to pretty much the same situation as you are in.
https://forums.moneysavingexpert.com/discussion/5522111

Yorkie1

The online switch sounds like the way to go, OP.


I'm sure you've got this covered, but in case anyone else is reading this thread, not only do you need to have the tax position sorted out, you also must have a landlord's gas safety certificate.