considering letting

ssilky55

It was suggested I contact my mortgage company to tell them I am considering letting my house due to a job relocation abroad, the mortgage company told me that if I am going to let I have to transfer my existing mortgage to a buy to let type. This would incurr penalty charges as I am 26 months into a 36 month redemption clause. What are the consequences of not informing the mortgage lender if I decide to let the property. Property would likely be let for a period of approximately 2 years.

aliasojo

I could be in a similar position shortly ssilky. I'll be interested in any replies too.

Scott

Really, I'd avoid doing that.

Strictly, it leaves you open to being taken to court over this, as well as having your interest rate put up. The banks are even less impressed with this when you live in England and Wales, as the tenants can severely inhibit their ability to repossess the property.

Anyway, if you get caught, it'll be fun and games. And you'll have to come up with a good reason to change your correspondence address.

aliasojo

Scott wrote:

Strictly, it leaves you open to being taken to court over this, as well as having your interest rate put up. The banks are even less impressed with this when you live in England and Wales, as the tenants can severely inhibit their ability to repossess the property.

I had no idea it was such a serious matter tbh. Mortgages are definately not my strong point.

If a buy to let mortgage is got.........is the tenant/reposession thing as much of a possible issue?

Ian_W

Another thought - whether or not you tell your lender, it would be very advisable to tell your insurers [if you use the lenders insurance, you'd need to change or double insure]. If not and you have a claim they will have every right to refuse it. No worry if it's a few hundred, not so clever if it's thousands - mega unclever if it's the building that goes.

Dumbledore55

A word of warning re letting, you need to consider how you'll get the property back if you need/want to. I wasn't aware when I let my house out that the tenant can just refuse to leave even if you give them the required 2 months notice and then you have to have grounds for eviction and the money to pay the legal costs.

One of the grounds is that you used to live there and want to move back in, but it can still take 6 months to evict and of course there's legal costs.

aliasojo

I've just phoned Northern Rock with a hypothetical 'considering remortgaging at present but would like to move at some point and unsure whether house would be sold or kept and rented out' question.

Answer was, if you know house is to be rented out from day of remortgage, then buy to let mortgage is needed. If you are living in the house and then decide to move and rent out, you can ask for residential sub let permission which basically allows you to carry on with same ordinary mortgage but with permission to let out.

No idea if this is standard advice, NR was the first ad I saw when I checked online for mortgages. Different lenders will likely have different rules.

Dumbledore55

Abbey has the same policy - I had to pay £225 for permission to rent out my own home but cheaper than paying the penalties for moving mortgages.

ssilky55

Thanks for that, lender is Bimingham and Midshire, they did not mention this option only that I would have to change to a buy to let product.

Dumbledore55

Ssilky55 - I would contact them again and ask if you can pay an administration fee to get residential sub let permission, perhaps the first advisor didn't know all the options or mistook your question and thought you were buying a property to let out. Its worth another call to check and get the name of the person you've spoken to.

EdInvestor

Particularly when an expatriate posting is involved, it's fairly normal to be allowed to keep the same mortgage with either payment of a fee or a higher interest rate during the letting period, as the change is likely to be only temporary.Don't forget to check on any change needed for the insurance.

With flats, you also have to inform the freeholder and may be charged a fee for the letting, depending on the provisions of your lease