Moving out and want to rent it - help!

Stuart_Kirk

Hi,

I need some advice on moving out of my home and renting it. If only it were that simple.

My existing fixed mortgage deal (circa 27% equity) runs til next July. The lender have agreed I can rent the property, charging a 1% premium for the privilege. Tenants found, rent agreed and ready to move in.

However, I plan to move to Dublin so will not be earning in the UK and therefore unable to apply for a new fixed rate in 12 months time. I assume.

My initial thought had been to apply for a 5-year fix now and get the same consent to let agreement (potentially with the same lender).

However, I'm concerned that they may not agree the letting in the first place (and so I jeopardise the agreement made for the next 12 months); I've also read that such an agreement is subject to review each 12 months anyway.

Other options such as buy-to-let or let-to-buy don't seem feasible as I will not have another mortgage in the UK, which seems to be a condition.

Any advice, past experiences but preferably not horror stories gratefully received!

glosoli

It is a bit of a tricky situation that you have found yourself in, if I am honest.

1) If you get a consent to let now on your existing product, in 12 months time when you lapse onto the Standard Variable Rate, the issue isn't going to be non-UK income, but it's going to be you won't be able to apply for residential products whilst the property is being rented out, unless you forgo the consent to let. So your options are going to be either a) remain on the Standard Variable Rate, or b) swap to a Buy to Let contract in 12 months time.

2) If you swap onto a fixed rate now, and then apply for a consent to let, you run the risk of the consent to let agreement being declined, or perhaps having to wait a period of time prior to applying for a consent to let, leaving you with presumably hefty early repayment charges should you require to move the mortgage to another lender so that you have permission to let. Also, how long does the consent to let last for? I presume not for 5 years, meaning at some point during the deal you will have to remortgage and break the deal in any case.

3) Another option would actually be to switch it onto a proper buy to let style agreement now, particularly if you know that you are going to have to do this in the future. There are lenders who do provide buy to let mortgages for people who don't have any other residential properties at the moment, despite what others might say.

However, the issue with this, is presuming you haven't had any landlord experience up until this point, the application is going to be a consumer buy to let, which may narrow down the selection of lenders who can assist. These types of applications are regulated, and they will presumably want to base the income on what your income is going to be after you move, not necessarily what your income is now, and this would fall into foreign currency lending, which is rare now for a regulated application.

Depending on how far down the road you are with the whole process, I would be questioning whether it was even worth doing at all, and selling the property. Or if I had to choose, I would probably proceed with consent to let now on your existing product, obtain landlord experience so that I could apply for an unregulated buy to let mortgage, and initiate a broker in around 6 months time and take my chances of remortgaging the buy to let based on foreign income.