Got permission to let, now what?!

owitemisermusa

A dilemma:

Got permission to let from lender - only for 12 months unfortunately.

Have 3 offers to choose from before deadline in a couple of days.

a) Tracker BOE + 0.74% (if they'll still honour it)

b) Fixed 4.99% for 3 years; fee £499 (again " ")

c) Fixed 4.99% for 5 years; (as above " ")

DO I take a gamble, fix and hope that I won't be forced to pay ERCs after the 12 months are up?

Just take the tracker and play it by ear?

Ideally, would love to fix it for 5yrs and see what happens with the housing market and interest rates safe that I am secure from any turbulence with the rate.

What to do......
Decisions, decisions........

puddy

if you have permission from your lender to let the property, why are you looking at taking out a mortgage, do you mean you are buying a property and have asked the prospective lender if they will allow letting? and now you are chosing from between the 3 mortgages they have on offer?

why are you wondering out ERC after 12 months, are you going to sell the property after that period or pay the mortgage off in full? why not ask again about renting it after that period or get a buy to let mortgage?

say a bit more about your situation, is this a 2nd property, will the rent cover the mortgage and maintenance...

owitemisermusa

Sorry, already own the said property. Remortgaging now. Main gist was concern about ERCs when they next review said mortgage.

However, read the consent letter (arrived safely, phew!) and it seems to place a time limit (12 months) only on the Tenancy agreement. Unsure if this means they can change their mind anytime but that's another matter.

If I fix and they review mortgage and ask one to move to BTL mortgage product then ERCs may come into force.

Am I making sense?

owitemisermusa

Auto bump!

puddy

ok, so you have a mortgage on your property and you are remortgaging it and want to let it out. and because they have given you a 12 month period where you are 'allowed' to let it out, you are wondering if, after that period is up (if they dont let you let it out again on that non BTL mortgage), you will need to remortgage again to a BTL mortgage, therefore incurring ETC.

It would seem a bit unfair wouldnt it that if they effectively force you to end your current mortgage and change to another and then say, btw, you now owe us the ERC because you changed mortgage early, but we all know what tricks banks have up their sleeves to maximise their own income!
cant you ask them about this scenario?
i wonder if the 12 month period is to avoid your prospective tenant getting the type of tenancy without an end date which might mean that you're at some point unable to shift them and sell on if you need to, that would put the price of the property down. therefore, maybe they are ok about each rental period being no longer than 12 months at a time??

puddy

see if they will do a 3 year,agreeing to cover 3 12 month tenancy periods and then go for that one. the 3 year seems the better choice. the tracker is good, but if,,,IF,,, inflation goes up, they are saying (on other threads) that interest rates might go up to counter that, therefore your tracker wouldnt be as good as the fixed.

owitemisermusa

Thanks jenner. I asked them a while ago and they seemed to suggest that it's a reviewable scenario.

Hmm... I wonder if you're right about the limit on tenancy agreements - to protect themselves from self-perpetuating tenancies.

I guess I'll have to ask prospective tenants to sign 12 month agreements each time - can't see any downsides.....

mcgetts

owitemisermusa wrote: »

Thanks jenner. I asked them a while ago and they seemed to suggest that it's a reviewable scenario.

Hmm... I wonder if you're right about the limit on tenancy agreements - to protect themselves from self-perpetuating tenancies.

I guess I'll have to ask prospective tenants to sign 12 month agreements each time - can't see any downsides.....

Hi I am a newbie on the forum so please excuse any ignorance on my part but just saw this thread and it would really help me out to understand the siuation being discussed here. The reason I ask is that I have a mortgage that I need to remortgage shortly and I would like to let the place out for a while but the BTL rates and conditions right now are killing me - so I am trying to understand if (as seems here) I can remortgage on a residential deal and then look to convert to BTL later when (or if) things calm down and lenders give more reasonable deals.

Thanks for any advice.