garyp

Just weighing up my options after having a viewer for my house, the first in months, if I could rent out my house if I still have a mortgage.
I have 9 years left on my mortgage and have a great tracker rate of 0.9% and dont want to change to a buy to let mortgage if I can help it.
Probably rent to family member just to cover mortgage. would I have to tell mortgage lender or could I get away with just covering payments if and when I go to Australia?
Have to mention coz I have had a drink and want to get off chest that when the viewer of my house left today my neighbour approached them (who we dont get on with, long story) and said 'if you av come about blah blah blah, its because we dont get on with each other. they just looked at him blank and said we just came for a viewing. He obviously thought they were official and had probably come to look at his shit hole of a garden. bangs goes that possible sale.

Zenshin

I am pretty sure you are supposed to tell your lender if you decide to let out your property. It should state it in your mortgage terms and conditions. We are in the same position as you. Got a fantastic tracker for the life of the mortgage and paying only 0.74% so the money we would get for rent would more than double the repayments.

Now the tricky thing is that the lender will only send your statements to your home address (the one the mortgage is on) since they assume you still live there. This wouldn't be a problem if you let it out to someone you know as they can hold it all aside for you so the bank wouldn't be any wiser.

I have asked our finance guy what would happen if they found out say a year or so down the track. You could just say you didn't realise and they may just hike your margin % on the base rate a little higher. I don't understand why a bank you have had a mortgage with for so many years can suddenly change your interest rate just because you decide not to live in it. It is robbery to me. Surely they should just be happy that the mortgage is being paid and is more likely to be paid when the rate is lower.

I intend on redirecting all my mail to Australia for the maximum of 2 years allowed by Royal Mail. Only costs around £80 and won't miss out on any other mail either. Not sure what I will do after that.

llanfachreth

More importantly if you sell you need to inform any buyer of any existing disputes with your neighbours or you could be sued

garyp

yes I realise that but it was over a shared access which was already sorted out before i bought the property as it has always been on deeds. Just that some people cant comprehend simple english thats why we distanced ourselves. neighbour just trying it on.

llanfachreth

You are definitely meant to inform your lender if you let it out, just like u need to inform them if anybody they don't know about moves in with you. The property is their security, they won't want any complications should they need to reposess property. However if u tell them they may well increase your rate...

LivingandlovingPerth

The main area is insurance. You need to explore this area in detail as we were in the same position and informed by our insurance company that if we did not have authority from the mortgage company out insurance would be void. So we got it!

thebooys

We are just going through this process now. We have decided to rent our property here in the uk.

Your mortgage company may decide to move you onto what is known as 'consent to lease', but beware they may want to completely change your current product and charge an arrangement fee. We are with the Halifax and they have allowed us to stay on our current fixed rate, but with confirmation that we are allowed to rent the property. (initially they wanted to put us on a crappy fixed rate product and charge us £1000 for the privelidge!)

You will need to change your B&C insurance to a buildings only insurance that is for Landlords if you decide to rent.

However, you have no legal obligation to change your mortgage to consent to lease as far as i'm aware and this was confirmed by my lender, but i didn't want to take the risk.

if you rent to family then at least you'll feel comfortable with the quality and reliability of your tenants!

good luck.

garyp

thanks for comments.
just spoke to Britannia building society and they are going to send me info pack. they said you can stay on current product with no changes but you have to fill in two forms, one was a tenancy agreement forget the other.
they charge £40 admin fee for the pleasure.

Scotty1

Hi
I've also looked into this as its likely we'll be renting out as well. I too have a low tracker with First Direct (HSBC) and have spoken to them about it. I have established that different lenders do different things - some charge you an additional percentage, some change your product to buy-to let, others charge you a set fee, like £200, others just say yes /or indeed no!

Firstdirect were very good, agreed on the spot and for free, with me keeping my great deal. However, I have 70% equity in my house, and with them, its a risk evaluation. They may not have been so helpful if I had bought a flat last year with a 95% mortgage. They also said that as my mortgage was an offset one, they would not allow me to draw down any equity once the arrangement was set up (I intend a large withdrawal beforehand)

I also did not say that this was a permanent move but that we are seeing what happened. They said they would agree for a year, want to talk again but would not renew for more than three on this product (ie would need to switch to buy to let)

As far as do you need to tell them or not; if you use and agent and they are any good they will insist on seeing permission; if you let yourself your tenant can see who your mortgage is with (through land registry) and ask them if they have permission to let; if you do not have landlords insurance your buildings insurance will be invalid, and it is highly likely that the clauses in that insurance will insist your mortgage company have given permission....so unless you want to risk not having any insurance - you should probably come clean

garyp

What if I want to borrow extra funds to migrate and rent my house out would this be a problem if they are aware of me renting out?

Scotty1

You are unlikely to be able to take out equity on the same terms as currently unless you have offset type mortgage or one that allows overpayments and withdrawals. You may want to ask them if they would agree to equity withdrawal and rental, though you will probably need to do the equity bit first. They may not be too keen on agreeing to you renting and then you taking out equity. Firstdirect warned me they would not allow that.

Zenshin

I am so glad I joined this forum. Hadn't thought of the insurance company wanting us to inform the bank. Shall add that to my list of things to find out now. Am growing more grey hairs by the day

What do you reckon our chances are of staying on the same mortgage since it is with the dreaded Northern Rock? Really can't afford to go on their standard variable rate just because it is being let out.

pompeyblonde

I never did, and I rented it for 6 and a half years! changed my insurance though..

slipshot

Same for us - changed to a landlords insurance with buildings only and rented out via an agent and all good. What you should or could do and what you actually have to do can be two very different things...

Julian H

Hi,

I am doing the same, I have my mortgage with First Direct and will be moving to California by the end of the year. can I ask, did First Direct agree willingly that you could rent your property with the current product you have ? I called as an anonymous new customer to see if they did buy to let mortgages and they said they did not. Therefore, I have not asked permission yet as I don't want to lose the current rate etc. that I'm on.

Therefore, if I call them and ask as you did, are you confident they will at least consider it and not that it is a policy or rule thing that they will flatly refuse ? I have the offset account linked to it and a First Direct credit card etc.

I would appreciate any advice you could give me before I give them a call. I have not let out the property yet, but about to start advertising.

Thanks in advance,
Julian