Can I temporarily rent out a residential mortgage?

lshinnmorr

Hi there

I am about to buy my first property and have found the perfect place and had an offer accepted. The only issue is that when I comes down to the timings of exchange etc I will still have 7months of my rental tenancy left (long story).
I know you would need a Consent to Let to let out a property but lenders say they wouldn't grant one so soon into a mortgage, even with the assurance that it's just for a few months before I can fully move in. 
Could I rent out my new property temporarily without informing the lender? Or will they immediately find out? If they found out, what would be the repercussions? 
(For context: I have flatmates at my current rental place that mean there would be no way of me subletting my rental place, only subletting the bought place).
So worried I'm going to lose this house because of this!
Thanks so much for your help! 

Slithery

A terrible idea for a couple of reasons. First of all it would be mortgage fraud and second what happens if your tenants refuse to leave when you want to move in? It could take years to legally evict them.

Why did you start looking at properties so early knowing about your current tenancy?

If you want to go ahead you can move into the property straight away and just budget for the 7 months of rent as a cost of buying.

MaryNB

If you could find a replacement tenant is there a chance your landlord and current flatmates would agree to a new tenancy? I realise there's little incentive for the landlord but if you found the replacement tenant and paid all the costs that the landlord would incur they may be agreeable. 

ETA: alternative idea. If you have a spare room get a lodger to help cover the living expenses of two properties. 

eddddy

You'd be in breach of your mortgage agreement, so if your mortgage lender finds out, they would tell you to get the tenant out - and they could end your mortgage agreement and repossess to get their money back.

Also, in theory, you'd also be committing fraud - which is a criminal offence - because you'd be making false statements to your mortgage lender about your intentions, in order to make a financial gain for yourself.

Rightmove and their partners offer services which notify mortgage lenders if a property they're lending on is advertised for rent. So your mortgage lender might be notified immediately, if your property is advertised for rent.

Plus there's a whole host of other issues to address - like insurance. And if the property is leasehold, there's also the issue of freeholder consent.

Emmia

The risk of you letting and the lender finding out, is that you'll have broken the terms of your mortgage so the lender could require you to pay it in full immediately.

Do you have enough money to cover both the mortgage and 7 months rental costs?

gettingtheresometime

Slithery said:

Why did you start looking at properties so early knowing about your current tenancy?

In fairness to the OP, it may have been because they weren't exactly looking but seeing what was available in their price range - I know we viewed our current house on that basis 
OP - any possibility that your flatmates know someone who wants a place?

saajan_12

lshinnmorr said:

Hi there

I am about to buy my first property and have found the perfect place and had an offer accepted. The only issue is that when I comes down to the timings of exchange etc I will still have 7months of my rental tenancy left (long story). - ah no! why did you start looking so early?
I know you would need a Consent to Let to let out a property but lenders say they wouldn't grant one so soon into a mortgage, even with the assurance that it's just for a few months before I can fully move in. - no. Its futile, they they won't believe your assurance. 
Could I rent out my new property temporarily without informing the lender? Or will they immediately find out? If they found out, what would be the repercussions? - Mortgage could be recalled, or increased to a BTL rates, or convicted for fraud..
(For context: I have flatmates at my current rental place that mean there would be no way of me subletting my rental place, only subletting the bought place). - well they'll have to leave eventually (or you continue paying rent on a periodic), so can you try to negotiate an early surrender with everyone leaving? Or alternatively find a subletter for your room only (who could be a lodger of the other flatmates)
So worried I'm going to lose this house because of this!
Thanks so much for your help! 

comments in line. Subletting the new property is impossible legally and risky illegally. You're better off trying to delay the purchase or trying to find someone for your current room / property. 

AnotherJoe

lshinnmorr said:

Hi there

I am about to buy my first property and have found the perfect place and had an offer accepted. The only issue is that when I comes down to the timings of exchange etc I will still have 7months of my rental tenancy left (long story).
I know you would need a Consent to Let to let out a property but lenders say they wouldn't grant one so soon into a mortgage, even with the assurance that it's just for a few months before I can fully move in. 
Could I rent out my new property temporarily without informing the lender?

Yes and the repercussions coudl be catastrophic*. See if you can find a new tenants to take over from you and if you cannot, and arent willing to accept the extra cost, pull out. You bid prematurely when you were in no position to do so.

* ... for example, not at all unlikely these days,  they refuse to pay rent, wont move out,  and it takes you two years to evict them and they are skint so you get no money back from them.

lshinnmorr

Ok, understood. Thanks for the responses - I will not buy. 

Sidenote: it seems kind of crazy to me that owning your own home gives you less flexibility or freedom than renting, with so many more possible negative consequences like getting in trouble with the law as outlined in the replies. I will keep renting for the foreseeable few years and not buy anything. 

molerat

lshinnmorr said:

Ok, understood. Thanks for the responses - I will not buy. 

Sidenote: it seems kind of crazy to me that owning your own home gives you less flexibility or freedom than renting, with so many more possible negative consequences like getting in trouble with the law as outlined in the replies. I will keep renting for the foreseeable few years and not buy anything.

Don't confuse owning your own home with having a heavily mortgaged home where someone else is carrying more of a risk on the property than you are.

lshinnmorr

Slithery said:

A terrible idea for a couple of reasons. First of all it would be mortgage fraud and second what happens if your tenants refuse to leave when you want to move in? It could take years to legally evict them.

Why did you start looking at properties so early knowing about your current tenancy?

If you want to go ahead you can move into the property straight away and just budget for the 7 months of rent as a cost of buying.

Thanks! 
I started looking because I wanted to see what was available in my price range for when my contract came to an end and randomly found the perfect place. Also, almost every service and advisor says it takes between 3 and 8 months to buy a house so was trying to be diligent, but the sellers want to complete much sooner than that. How long would you recommend to leave before the end of my tenancy to start looking at properties? 

To your second point, buying a one bed as a single person in London means that my monthly mortgage repayments will be about £1400 and I'm afraid I don't have a spare £10k to spend on having two properties for the gap.