Renting out my property

BurnsieUK

Good evening all.

I really don't like my job and I thought about retraining. I've been offered a fantastic opportunity on a training course outside of a commutable distance from where I live.

I am therefore trying to do the maths on whether this opportunity is feasible, and the mortgage is obviously the biggest stumbling block.

I have a nationwide mortgage.

It is a fixed rate mortgage at just 1.8% which expires in the autumn of next year.

Speaking to nationwide, I cannot rent out my property and they will apply a 1% addition to my mortgage rate (which would be financially manageable from herself). However, I am sure they said that I would then be locked in to this new buy-to-let equivalent (they don't technically do buy to let mortgages) for 3 years.

This means that when my current mortgage rate is due for renewal next autumn I will automatically be placed on their base rate tracker which currently is around 5%. This would of course significantly increase my mortgage.

The other option is look to leave nationwide early and incur some fees.

However, although buy to let mortgages may offer a competitively low rate, you have to put down at least 20% deposit where as I think I would only have (or had) around about 14%.

therefore, I am looking for any ideas about how to go about this and whether it is feasible at all.

Any comments or signposting would be most welcome

Thanks

B

csgohan4

Have you considered the overheads for renting as well as the tax and legal liabilities? Renting is not a quick money making machine.




https://forums.moneysavingexpert.com/discussion/5896992/evicting-tenants-via-court-and-bailiffs

BurnsieUK

Yes. I am aware of the risks and have factored in the cost of "protection" (to the extent that you can).

However, the housing market isn't great round here currently (Lincoln) with similar properties being unsold only £5k above what I paid for mine (good rental market however), so renting is my only option

foxy-stoat

Can you not sell it and buy where you will be working?

BurnsieUK

Unfortunately not. I won't be earning enough and I'd not look to stop there long term.

AnotherJoe

How long is this training course?
Would it be feasible to be on the course Mon-Fri, staying as a lodger and then back to your house for the weekend (or most weekends) , and get a lodger into your own house, either Mon-Fri or all week, to offset the cost of that?

BurnsieUK

3.5 years

And 5 hours away. Plus I'd probably be working on the weekends too.

!!!!!!. Looks like I'm stuck here

AnotherJoe

Sell up & rent. I dont see house prices doing anything the next few years.

BurnsieUK

Not feasible. I won't really be earning much up there (just enough to pay rent, food etc).

And I'm in a fixed term mortgage currently so can't afford the early repayment....

Unless..... You don't want to buy a flat in Lincoln do ya? :money:

MEM62

If you rent have you taken into account that you will loose at lease 20% of the rental come to income tax - more if it pushes you into the 40% tax bracket. It is taxable income. You will also be looking at a cost of around 10% of the rent if you have an estate agent fully manage the property for you. It doesn't sound as if the plan is affordable.

However, have you considered a 'lodger'. You can have an income of £625 per month from a lodger tax free. Of course, I do not know what the differential is in your area between the income from renting out fully and the income from a lodger but you might be able to make the number work as the lodger option frees you from the tax liability.

You will have to consider the house as your main residence in order to qualify so some practical juggling will be required.

BurnsieUK

Hi.

Thanks for the reply.

If I charged a lodger, say £450pcm, even without including bills, I'd still be out of pocket.

I assume I wouldn't be taxed on income from rent due to low earnings (under £14k).

The only thing I could do is to "move back in" (when my current mortgage expires) then renegotiate my mortgage and then reapply for the consent to let..... and move back out... Quickly.

Even if I took a longer fixed rate out with a higher %, I would still have to pay early repayment fees.

The only thing I am slightly miffed about is that when I remortgaged, I did ask about renting. They told be about the 1% increase, but didnt tell me about the fixed 3 year period after that. Should that be in my T&C's?