Can banks find out?

geras

Hello,
I have a mortagage that will only allow me to let the house out for 12 months and for a very good reason (i am not sure my reason is good enough). I need to relocate because I accepted a job elsewhere and I havent been able to sell my house (not a susprise nowadays) so I really need to let it out to reunite with my family (wife and young baby). I dont want to redeem the mortgage because it is a good deal (I think!), it is repayment and is not higher than 0.9% the Bank of England base rate. Nowdays mortgages must be more expensive than this one.
A friend is interested in renting my house. I plan to declare the rental income to HMRC because, from what i have read, I can offset the mortagage payments against the rent (the rent will not cover all the expenses) and hopefully get some tax rebate (please correct me if i am wrong, considering my mortgage is repayment and not interest only)
I dont want to tell the bank about the letting, but i do want to have a Landlords' building insurance as I wont be living in the house and want to be protected. IS THERE ANY WAY THAT THE BANK MIGHT CATCH ME OUT DOING ALL THESE THINGS? Obviously, i will make my monthly mortgage payments as usual and i havent missed one so far, thankfully!
i do hope someone can help me.
Many thanks!

LilacPixie

Yes the bank can catch you out and quite possily will.

Tell your mortgage company why you need to rent out and if they say no then sell it.

Rules are there for a reason, you can't pick and choose what ones you want to adhere too.

geras

I dont want to choose and pick rules, I am forced to do so. I have tried to sell since last September and i havent been able to, all because of banks being negligent lending money in the past and now paranoid about lending.
I am in this situation because of them, in normal circumstances I should be able to sell and move on.
thank you for your reply anyway

Ian_Griffiths_Halifax

The reason you want to rent the property out is one of the most common reasons for the lender to allow you to do so.

Let them know so that you are totally above board.

Some lenders might charge you around £100 for a consent to let for one year or charge you more for a consent to let indefinitly.

LilacPixie

geras wrote: »

I dont want to choose and pick rules, I am forced to do so. I have tried to sell since last September and i havent been able to, all because of banks being negligent lending money in the past and now paranoid about lending.
I am in this situation because of them, in normal circumstances I should be able to sell and move on.
thank you for your reply anyway

But you are wanting to pick and choose the rules you adhere to.

You want to join your family, you want to rent out your home, you want to declare the rental income and mortgage payments to HMRC because you will get a tax rebate.

You don't want to redeem your mortgage because you feel its a good deal, you don't want to tell your mortgage company because your not sure your reason is good enough and they only allow letting for 12 months anyway. Your house hasn't sold presumably because it is over priced in the first place.
I know it may seem harsh but you cannot have your cake and eat it too. Tell your lender, if they say no reduce your house price to a more realistic level. If that doesn't work then either stay put and relocate at a later date. Trying to have it all by ultimatly fraudulent means makes you no better than the 'negligent banks'

Incisor

geras wrote: »

I dont want to choose and pick rules, I am forced to do so. I have tried to sell since last September and i havent been able to, all because of banks being negligent lending money in the past and now paranoid about lending.

Foolish banks lend excessively and bigger fools borrow from them.

I am in this situation because of them, in normal circumstances I should be able to sell and move on.

If you duck and dive, you might get caught out, and if you are seen to have deceived, there will be no leeway. But if you make a good case, then you might get the concessions you need. Wife and child is not a good case, because they are not relevant to the banks bottom line.. Being able to fund it all is a good case.

geras

LilacPixie wrote: »

But you are wanting to pick and choose the rules you adhere to.

You want to join your family, you want to rent out your home, you want to declare the rental income and mortgage payments to HMRC because you will get a tax rebate.

You don't want to redeem your mortgage because you feel its a good deal, you don't want to tell your mortgage company because your not sure your reason is good enough and they only allow letting for 12 months anyway. Your house hasn't sold presumably because it is over priced in the first place.
I know it may seem harsh but you cannot have your cake and eat it too. Tell your lender, if they say no reduce your house price to a more realistic level. If that doesn't work then either stay put and relocate at a later date. Trying to have it all by ultimatly fraudulent means makes you no better than the 'negligent banks'

I know that I am picking, it is the frustration talking. I have tried everything, even when i first put the house in the market the asking price was lower than the valuation from the estate agency and since then i have reduced the price 3 times. there is nothing wrong with my house, one couple wanted to buy but coulndt get a mortgage and for the last 3 months there has been no viewings at all, so i am very frustrated....thats why i am considering doing the wrong thing, what else can i do? i dont do this normally, but this situation has made me ill and i have to do something.....having said all this, and read the replies, i will do in the end the right thing, thank you.

PasturesNew

geras wrote: »

I know that I am picking, it is the frustration talking. I have tried everything, even when i first put the house in the market the asking price was lower than the valuation from the estate agency and since then i have reduced the price 3 times. there is nothing wrong with my house, one couple wanted to buy but coulndt get a mortgage and for the last 3 months there has been no viewings at all, so i am very frustrated....thats why i am considering doing the wrong thing, what else can i do? i dont do this normally, but this situation has made me ill and i have to do something.....having said all this, and read the replies, i will do in the end the right thing, thank you.

You could try sticking it in an auction with a reserve price.
Not all auction property goes at silly low money.
Investigate what's sold lately at your local auction (and in your area but handled by auction houses elsewhere) and look for houses like yours and see what they got.

Even if you don't decide to auction it, at least do the research and try to judge the probability and estimate the costs.

Rabiddog_2

You can rent out, you just need to change your mortgage? That's your real problem, not wanting to pay higher mortgage payments. Bite the bullet and get on with it. Why not let it for 12 months with existing mortgage and then if necessary re-mortgage in 12 months when all this crunchiness will be a thing of the past, but a distant unpleasant memory. Your own bank, will probably want to keep your business then anyway.

Kez100

You won't get a tax rebate as your losses on long term letting can only be set against profits from the same type of income. You can't set the losses against your earned income, or investment income in the year. There are also even more stringent rules on letting to close people - where losses can only be offset against future profits of that person/related parties. (You'll need to check that rule out to see if it is appropriate to your circumstances).

When calculating your tax position, only the interest can be deducted from rental income, not the repayment part.

Yes, you need to advise HMRC,complete a return, pay tax on any profit or quantify losses to carry forward for possible future use.

FraudBuster

but this situation has made me ill and i have to do something

Honesty is the best policy and you will be able to sleep soundly.