What happens if I revert to SVR?

Mandelbaum

Hi All,

We have a bit of a quandary: we have a standard residential repayment mortgage on a house that we've since let out and have applied with Barclays to replace the existing residential mortgage with a BTL. The fixed term on the existing residential mortgage expires end of Dec 2016.

Tenants are absolutely covering the rent but my wife and I are both self employed (e have a Ltd co with less than 2 years accounts) and even though we are very solvent, we don't satisfy the new rules.

Question - what happens at the end of the fixed term residential mortgage? I understand that the interest rate rises (in our case from 1.88% to the current 3.74% SVR) but do we get Barclays ringing us up asking punchy questions or will they leave us alone and happily collect their monthly cash?

The increased repayments are perfectly manageable for us and it's viable for us to leave alone for 8-9 months until we have 2 years' Ltd company accounts.

Thanks in advance.

amnblog

You've lost me.

Are you saying you have asked Barclays to remortgage as buy to let.

Or have you asked them for consent to let?

Or do they know nothing about you not being in residence.

Mandelbaum

Correct on the first one, sorry if my post was confusing...

We have since moved out of the house, want to revert to a BTL, but don't satisfy Barclays' BTL conditions (even though we can easily cover the repayments, have a nice cash buffer etc)

The question is what will Barclays do? Will they just leave us alone after the fixed rate expires and let us repay the higher SVR?

minimike2

Unless you can get permission to let (which you won't if you do not plan on moving back into the property) then you will be in breach of your mortgage conditions.

You would be best off seeking some advice on what other options are open to you from a broker.

Elfbert

I would think that if they figure out you've let the property without their consent they might be rather put-out and you probably need to find the original terms of the mortgage and read them to find out what penalty you may face!

Now they've refused the BTL mortgage they may well check the electoral roll to see if your names are registered to the property. It's unlikely, but they could potentially face them calling in the debt, as you'll probably have breached the conditions.

You possibly also need to check the insurance etc. on the house, as it's unlikely to cover a property which has been let with no consent.

minimike2

Elfbert wrote: »

Now they've refused the BTL mortgage they may well check the electoral roll to see if your names are registered to the property. It's unlikely, but they could potentially face them calling in the debt, as you'll probably have breached the conditions.

Yes they may well check the electoral roll. I would be suprised if it didn't happen.

Re calling in the debt - Let's not start scare stories - An easy conclusion to jump to but not necessarily a course of action that would be taken.

Thrugelmir

Mandelbaum wrote: »

The question is what will Barclays do? Will they just leave us alone after the fixed rate expires and let us repay the higher SVR?

They could impose an additional charge i.e. 0.5% or 1% on top.

Mandelbaum

Thanks all for you answers - appreciate the input and I will speak to a mortgage adviser as soon as possible.