Can I temporarily rent out a residential mortgage?

Justonemorecupoftea

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. 

If you own outright then you can do what you want - it's the mortgage that has the restrictions.

Once your 7 months is up you'll go on to a rolling monthly tenancy so no need to wait years if timing is an issue.

Also, what are you basing the 7 months on - how long do you have left at the moment?

user1977

lshinnmorr said:

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.

It isn't a "owning your own home" thing, it's a "wanting to borrow a large sum of money" thing.

lshinnmorr

molerat said:

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.

So you're saying it's better to either keep renting or buy outright? 
Even if I was putting down a 60% deposit the situation would remain the same and you're not allowed to rent - so clearly the equity in the home gives you no more flexibility or rights in this case. 

Justonemorecupoftea

lshinnmorr said:

molerat said:

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.

So you're saying it's better to either keep renting or buy outright? 
Even if I was putting down a 60% deposit the situation would remain the same and you're not allowed to rent - so clearly the equity in the home gives you no more flexibility or rights in this case. 

The bank lends money based on certain conditions. You living there is one of those conditions. If you want to rent you can, but you need to tell your lender and change the terms of the borrowing.

The main issue with your proposal around short term renting is that there is no guarantee that your tenants will vacate within your required timeline, so you might find yourself with nowhere to live. Also renting out comes with certain legal responsibilities and a duty of care to tenants.

Grumpy_chap

@lshinnmorr - the comments (conclusions) about owning your own home being less flexible than renting are somewhat a leap and interpretation and not helpful to the current situation.

As others have said, taking a mortgage and then immediately looking to rent will not be attractive to a mortgage lender - correctly or not, the lender is likely to think it was always the intention to do a BTL and therefore a commercial mortgage should have been in place from the outset.  In addition, you cannot guarantee that the tenant will willingly vacate at the end of the 7 months.  Based upon your OP, you should forget the concept of letting out your future home.

However, this part is worth understanding and expanding more:

lshinnmorr said:

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).

Congratulations on finding the right home.  When was the offer accepted?
Have you instructed solicitors yet?
Have searches been done?
Surveys?
If the offer has only just been accepted, then it is likely to be at least a month from now until exchange and you could negotiate another month between exchange and completion.  It would not be unusual for it to take 2 months to reach exchange.  That could already be 3 months out of the 7 that you are concerned with.

Next, how is your rental tenancy structured?  Is it truly fixed term?  If so, start date, end date?  Is there a break clause?  When did you first move into this rental property?  Sometimes, a fixed term tenancy is extended for another fixed term but actually turned into rolling contract.  Certainly lost to check here in the detail.

The final query I have is about your flatmates / lodgers in the rental property.  Are they moving with you to the new property?  Are they set to move out to wherever when you leave the rental?  Do they have any interest (and capability) to take over the rental property when you are moved out?

Don't give up yet, there could be options to solve this other than the initrial approach suggested in your OP.

Good luck with making it all work

lookstraightahead

If you have a mortgage, you don't own your own home, the bank does (or at least they have a say in the matter). There's nothing wrong with having a mortgage, it's a good type of debt, but someone else is financing your home yes.

AnotherJoe

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. 

Nothing to do with home ownership, its to do with a mortgage and the general risks of renting.

AnotherJoe

lshinnmorr said:

molerat said:

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.

So you're saying it's better to either keep renting or buy outright? 
Even if I was putting down a 60% deposit the situation would remain the same and you're not allowed to rent - so clearly the equity in the home gives you no more flexibility or rights in this case. 

You are allowed to rent if you got the right mortgage.

Your proposed residential mortgage will be at a lower rate and with a smaller deposit than a BTL mortgage would have.

MaryNB

lshinnmorr said:

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. 

How long is a piece of string? You could have 4 months left on your contract but not find somewhere for 2 months and then it take 4 months for the purchase to go through. Or you find somewhere right away, it goes through in 3 months. 

The key thing is at the end of your tenancy don't get it renewed for another fixed period. If you do nothing it automatically becomes a rolling tenancy then you only have to give a month's notice from the day the rent is due (unless the contract allows for a rolling tenancy and specifies a longer notice period). If they tell you it has to be renewed they're lying. Although if they're particularly petty they could threated you with an S21 notice (4 months notice from June, probably 2 months from October). 

Do not give notice on your tenancy until you exchange. You need to allow for up to 2 months overlap. If, for example,  you exchange and complete on the 3rd of the month but your rent was due on the 1st, your notice period doesn't start until the 1st of the following month. 

Slithery

If you have a joint tenancy with your housemates then it becomes more complicated. If you give notice then you are giving notice for the entire tenancy meaning your housemates will need to leave as well. If they fail to do so then the tenancy continues and you will still be liable for the full (maybe even double) rent until they all leave.

The simplest thing to do would be to move into a house-share or bedsit where you have a sole tenancy before starting to look at properties, that way when you do find something you don't have anyone else's timescales to think about.