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What happens if you start renting out?
dier999
Posts: 1 Newbie
Hi All, I am looking to buy a property soon for myself to live in. However, I always wondered what happens if you have a mortgage with less than 75% LTV (i.e. not a Buy to Let mortgage), but your circumstances change and you want to rent out your property? I heard that you can usually ask the bank about renting and they could grant you an exemption to allow renting out for up to 1 year. My question is what happens if you want to rent out for longer but are unable yet to convert the mortgage to BTL? Is there any penalty that the bank can impose if you rent out without informing them? (Obviously the base assumption is that rent will cover mortgage payments).
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Comments
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The obvious penalty is that they could call in the mortgage since you will have broken the terms you agreed to...
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Depends on terms in the contract you signed. E.g. Worst case they can ask you to pay back the full loaned amount.0
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You ask for consent to let - if granted gives you permission from your lender to rent out your home for a limited time (then you remortgage to buy to let when can).
If they don't grant you aren't allowed to let out without remortgaging (and presumably paying ERCs).
If you rent out the property without telling the lender you are violating the mortgage agreement - they can as said above demand you pay back the loan, or you will incur extra fees/charges.1 -
Most will give you consent to let for a short term period (1 or 2) years. Some do not charge anything extra, some a flat fee, and some lift the interest rate.
Lenders will not let a residential borrower switch to a new rate is the property is let.
Longer term they will get fidgety and ask you to remortgage to BTL.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.2
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