renting without telling the mortgage lender...
Mar 23rd 2012, 3:06 am
#16
BE Forum Addict
Joined: Aug 2010
Location: Not Brisbane
Posts: 1,210
Re: renting without telling the mortgage lender...
Had I known a recession was around the corner I wouldn't have bought, I would have stayed renting. How was I supposed to know what was about to happen with the worldwide economy?
If the recession hadn't happened and house prices had stayed at what they were 5 years ago, my house would now be worth what we now owe and I wouldn't have any negative equity. So yes I do blame the recession.
Yes the rent won't cover the mortgage payments so we'll be sending some back every month but we have budgeted for that. And I'm well aware of fees and management costs involved in renting out our house.
You talk like I should be punished for taking out a mortgage at the wrong time? Why? Nobody could see what was coming. I'm just trying to deal with what I've got now.
And I have no intentions of giving the keys back.
If the recession hadn't happened and house prices had stayed at what they were 5 years ago, my house would now be worth what we now owe and I wouldn't have any negative equity. So yes I do blame the recession.
Yes the rent won't cover the mortgage payments so we'll be sending some back every month but we have budgeted for that. And I'm well aware of fees and management costs involved in renting out our house.
You talk like I should be punished for taking out a mortgage at the wrong time? Why? Nobody could see what was coming. I'm just trying to deal with what I've got now.
And I have no intentions of giving the keys back.
Phone the bank (I assume Northern Rock) if they say no then that's it you can't go, if they say yes you're home and dry.
Mar 23rd 2012, 3:09 am
#17
BE Forum Addict
Joined: Aug 2010
Location: Not Brisbane
Posts: 1,210
Re: renting without telling the mortgage lender...
If your rental income will cover your mortgage and loan costs then forget "a friend of a friend who works for our lender says" just contact your lender directly and ask to speak to the Home Loans Administration department.
TELL them that you have been offered an employment contract in Australia and that you "intend to return" to the UK within 2 years. You therefore would like to rent out your property whilst you are away to cover your costs.
They will need to see your Landlords Insurance with them named as a party with an interest and a copy of the tenancy agreement.
Having seen how many letting agents work around the world we decided that we didn't want them anywhere near our house, tenant or money!
Instead we went down the DIY route:-
- Used an online rental service (Silver £79) http://www.lettingaproperty.com and had the property rented within 24 hours of it being advertised (via rightmove).
- Had reference checks (credit and employer) done through the same online agent (Free to landlord - Tenant pays), (accepted by our insurers see below)
- We obtained 5* rated (who knows until you have to claim
) Landlord insurance http://www.justlandlords.co.uk/which also covers loss of rental / non payment of rental.
- Used local tradesmen to get Electric / Gas / Energy certificates etc
- Had a local professional inventory clerk create a property inventory and check the client into the property £145 (whislt we were in Oz) and used him again to do 1/4ly inspections (£45).
- We used the Governments Tenants Deposit Protection scheme http://www.depositprotection.com/, so both the tenant and I know it is a safe as it can be
(Free service)
- The tenant pays his rent Direct into our UK bank account, so we know immediately if he is late rather than wait 6 to 12 weeks for an agent to tell us
We believe we have so much more "control" over the letting than we would have had through an agent, we have a far better service than most agents are able to offer and at a significantly reduced price. The tenant knows his deposit is secure, he has access to us 24x7 via a UK phone number which we obtained through SKYPE and we have access to and contact with the local tradesmen we used who are happy to deal direct with a landlord rather than waiting 30/60/90 days for invoices to be paid through a letting agent.
We would strongly advise you NOT to let out a property WITHOUT informing your lender, you ARE just asking for trouble!
As for the personal comments about your decision to take out a 125% mortgage from others on this board, just think one day you could have a life as perfect as theirs, they have never made any mistakes
!
The proliferation of these anonymous personal attacks are one of the reasons I rarely visit BE these days
TELL them that you have been offered an employment contract in Australia and that you "intend to return" to the UK within 2 years. You therefore would like to rent out your property whilst you are away to cover your costs.
They will need to see your Landlords Insurance with them named as a party with an interest and a copy of the tenancy agreement.
Having seen how many letting agents work around the world we decided that we didn't want them anywhere near our house, tenant or money!
Instead we went down the DIY route:-
- Used an online rental service (Silver £79) http://www.lettingaproperty.com and had the property rented within 24 hours of it being advertised (via rightmove).
- Had reference checks (credit and employer) done through the same online agent (Free to landlord - Tenant pays), (accepted by our insurers see below)
- We obtained 5* rated (who knows until you have to claim
) Landlord insurance http://www.justlandlords.co.uk/which also covers loss of rental / non payment of rental.- Used local tradesmen to get Electric / Gas / Energy certificates etc
- Had a local professional inventory clerk create a property inventory and check the client into the property £145 (whislt we were in Oz) and used him again to do 1/4ly inspections (£45).
- We used the Governments Tenants Deposit Protection scheme http://www.depositprotection.com/, so both the tenant and I know it is a safe as it can be
(Free service)- The tenant pays his rent Direct into our UK bank account, so we know immediately if he is late rather than wait 6 to 12 weeks for an agent to tell us
We believe we have so much more "control" over the letting than we would have had through an agent, we have a far better service than most agents are able to offer and at a significantly reduced price. The tenant knows his deposit is secure, he has access to us 24x7 via a UK phone number which we obtained through SKYPE and we have access to and contact with the local tradesmen we used who are happy to deal direct with a landlord rather than waiting 30/60/90 days for invoices to be paid through a letting agent.
We would strongly advise you NOT to let out a property WITHOUT informing your lender, you ARE just asking for trouble!
As for the personal comments about your decision to take out a 125% mortgage from others on this board, just think one day you could have a life as perfect as theirs, they have never made any mistakes
! The proliferation of these anonymous personal attacks are one of the reasons I rarely visit BE these days
Everyone makes mistakes but the end result isn't always fraud.
Last edited by bingobob777; Mar 23rd 2012 at 3:12 am.
Mar 23rd 2012, 8:17 am
#18
BE Forum Addict
Joined: Dec 2006
Location: Mt Martha, Melbourne
Posts: 1,199
Re: renting without telling the mortgage lender...
We used the agent we bought the flat from, knew them pretty well but still they managed NOT to keep an eye on it despite 3 month checks. They wondered why there was a strong smell of aftershave on doing one of the checks....that was to disguise the smell of the toilet and weed they had been smoking! I can't see how they managed to miss how dirty it had got (my cream carpet was black), the fact there was candle wax dripping down the walls and one wall had been repainted by the tenants...wonder why!
With hindsight I would have also requested a friend to go with the agent as a double check, my Dad did offer but we wanted to keep someone paying the money
. I did wonder why they were getting 150 quid out of the rent each month, that's why we sold in the end.
So if you do rent out please make sure like here there are photos of how you left it and updated photos at each inspection. We learnt a LOT about being a landlord by being renter here!
With hindsight I would have also requested a friend to go with the agent as a double check, my Dad did offer but we wanted to keep someone paying the money
. I did wonder why they were getting 150 quid out of the rent each month, that's why we sold in the end.So if you do rent out please make sure like here there are photos of how you left it and updated photos at each inspection. We learnt a LOT about being a landlord by being renter here!
Mar 23rd 2012, 9:21 am
#19
Joined: Jun 2006
Posts: 4,555
Re: renting without telling the mortgage lender...
Heh property only ever goes up and it is purely the fault of the banks for having such crap risk management.
Mar 25th 2012, 11:41 pm
#20
Forum Regular
Joined: Aug 2008
Location: Illawarra
Posts: 266
Re: renting without telling the mortgage lender...
We've rented out a house twice. First time we wrote to the lender, they said we had to bring the LTV down to 85%, couldn't afford that, rented it out anyway and had no problem.
My pal did same and got caught by the IR, I don't think she redirected her mail and the tenant sent it back. I don't know if the mortgage company found out too but it seems probable.
I used to work for a big insurer and handled Landlord's insurance. We never asked for the mortgage company but from time to time we would be informed by a broker and would note this on the policy. If the policy was cancelled or if the sum insured was reduced we would write and tell the mortgage company.
I have landlord's insurance just now, I haven't told the broker the mortagage company's name and they haven't asked.
My pal did same and got caught by the IR, I don't think she redirected her mail and the tenant sent it back. I don't know if the mortgage company found out too but it seems probable.
I used to work for a big insurer and handled Landlord's insurance. We never asked for the mortgage company but from time to time we would be informed by a broker and would note this on the policy. If the policy was cancelled or if the sum insured was reduced we would write and tell the mortgage company.
I have landlord's insurance just now, I haven't told the broker the mortagage company's name and they haven't asked.
Mar 26th 2012, 2:19 am
#21
BE Forum Addict
Joined: Nov 2004
Posts: 2,584
Re: renting without telling the mortgage lender...
The only reason for keeping the house is if (1) you intend to return after a period or (2) you expect house prices to go up.
We could all argue forever about whether house prices will go up but I think there will be at least a period of 5 - 10 years when they don't.
The fact that the bank lent you 125% is their look out. If I didn't intend to return I would sell it now, take the hit and get on with the rest of your life. I am not sure what will happen if though if you do not have funds to cover the shortfall and the bank refuse to release the deeds.
We could all argue forever about whether house prices will go up but I think there will be at least a period of 5 - 10 years when they don't.
The fact that the bank lent you 125% is their look out. If I didn't intend to return I would sell it now, take the hit and get on with the rest of your life. I am not sure what will happen if though if you do not have funds to cover the shortfall and the bank refuse to release the deeds.
Mar 26th 2012, 6:25 am
#22
(It's not my real name)
Joined: Sep 2002
Location: Ilukapool. WA
Posts: 12,467
Mar 26th 2012, 9:21 am
#23
Forum Regular
Thread Starter
Joined: Feb 2008
Location: Perth, Australia
Posts: 109
Re: renting without telling the mortgage lender...
Thanks everyone for the input.
Renth..how come they were ridiculed? I'm not in the finance industry, clearly, so I had no idea but if plenty of people did why wasn't anything done about it before the recession?
When we took out the mortgage we had no idea we would want to emigrate. The plan was to extend the house and stay in but now we have different dreams and it's not straight forward making them reality but we're trying.
Ned..we don't know if we'll settle in oz or come back to the uk, hopefully not but we don't know until we try. We don't have the funds to sell and take the hit unfortunately or I would sell it. I've asked the estate agent and he doesn't think it would sell just now.
Kim..thanks for the advice. Our estate agent friend has been a family friend for 40 years so we trust them completely. I will however give my neighbour a contact number if they see anything dodgy going on.
Renth..how come they were ridiculed? I'm not in the finance industry, clearly, so I had no idea but if plenty of people did why wasn't anything done about it before the recession?
When we took out the mortgage we had no idea we would want to emigrate. The plan was to extend the house and stay in but now we have different dreams and it's not straight forward making them reality but we're trying.
Ned..we don't know if we'll settle in oz or come back to the uk, hopefully not but we don't know until we try. We don't have the funds to sell and take the hit unfortunately or I would sell it. I've asked the estate agent and he doesn't think it would sell just now.
Kim..thanks for the advice. Our estate agent friend has been a family friend for 40 years so we trust them completely. I will however give my neighbour a contact number if they see anything dodgy going on.
Mar 26th 2012, 9:34 am
#24
(It's not my real name)
Joined: Sep 2002
Location: Ilukapool. WA
Posts: 12,467
Re: renting without telling the mortgage lender...
Mar 26th 2012, 9:57 am
#25
Joined: Jun 2006
Posts: 4,555
Re: renting without telling the mortgage lender...
Buy Bear Stearns.
Check this out, Peter Schiff being ridiculed, it wasn't just Schiff who predicted the GFC quite a few others did too..
http://youtube.com/watch?v=2I0QN-FYkpw
http://youtube.com/watch?v=2I0QN-FYkpw
Mar 26th 2012, 10:50 am
#26
Forum Regular
Joined: Aug 2008
Location: Australia
Posts: 272
Re: renting without telling the mortgage lender...
Thank you everyone for your advice. I rang a family friend who is an estate agent and asked him about permission letters and landlord insurance. He said he won't need a letter of permission from our lender and he said the landlord insurance will be worded so that it is still valid without our lender giving permission to rent. He said to redirect our post to a relatives house so nothing will be sent back from our house with a message saying we're not living there. He said as long as the mortgage is being paid every month there won't be a problem.
I don't like keeping info from our lender but I'm not putting our lives on hold until the market picks up again. Australia has been a long term dream and I'm not letting a damn recession stop us!
I don't like keeping info from our lender but I'm not putting our lives on hold until the market picks up again. Australia has been a long term dream and I'm not letting a damn recession stop us!
Yeh it's the recessions fault you're in negative equity, absolutely nothing to do with taking out a 125% mortgage 
No doubt your mortage payments on a 125% mortgage will be more than the rent you'll get, so you'll be sending money back every month, it won't be let all the time, you'll have to pay management fees etc etc
Keep it and it's going to cost you, sell it and it's going to cost you. With one the pain will be upfront with the other it will be drawn out over several years.
You decide. You took out a 125% mortgage at almost the peak of the housing market, why shouldn't you face the consequences?
And FYI and others, in the UK you CANNOT just hand the keys back. The mortgage company can then just sell at whatever price it wants and chase you for the rest of your life for the outstanding balance.
No doubt your mortage payments on a 125% mortgage will be more than the rent you'll get, so you'll be sending money back every month, it won't be let all the time, you'll have to pay management fees etc etc
Keep it and it's going to cost you, sell it and it's going to cost you. With one the pain will be upfront with the other it will be drawn out over several years.
You decide. You took out a 125% mortgage at almost the peak of the housing market, why shouldn't you face the consequences?
And FYI and others, in the UK you CANNOT just hand the keys back. The mortgage company can then just sell at whatever price it wants and chase you for the rest of your life for the outstanding balance.
They wont chase for rest of life!, be realistic, the owner goes of the electrol list, they cant find him they repo the house so know they do nto live there anymore ... get debt collectors to try and trace them civil debt so cant do nowt, go to the local county court get a CCJ against the debtors ... that lasts 6 yrs then that is it done with!
Last edited by Pollyana; Mar 27th 2012 at 10:47 am. Reason: correctly attributing quotes
Mar 26th 2012, 11:57 am
#27
(It's not my real name)
Joined: Sep 2002
Location: Ilukapool. WA
Posts: 12,467
Mar 26th 2012, 5:23 pm
#28
Forum Regular
Thread Starter
Joined: Feb 2008
Location: Perth, Australia
Posts: 109
Re: renting without telling the mortgage lender...
Check this out, Peter Schiff being ridiculed, it wasn't just Schiff who predicted the GFC quite a few others did too..
http://youtube.com/watch?v=2I0QN-FYkpw
http://youtube.com/watch?v=2I0QN-FYkpw
Mar 27th 2012, 4:11 am
#29
Officially Bewildered
Joined: Nov 2006
Location: Blue Mountains, NSW
Posts: 5,523
Re: renting without telling the mortgage lender...
They wont chase for rest of life!, be realistic, the owner goes of the electrol list, they cant find him they repo the house so know they do nto live there anymore ... get debt collectors to try and trace them civil debt so cant do nowt, go to the local county court get a CCJ against the debtors ... that lasts 6 yrs then that is it done with!
Mar 27th 2012, 5:03 am
#30
BE Forum Addict
Joined: Aug 2010
Location: Not Brisbane
Posts: 1,210
Re: renting without telling the mortgage lender...
They wont chase for rest of life!, be realistic, the owner goes of the electrol list, they cant find him they repo the house so know they do nto live there anymore ... get debt collectors to try and trace them civil debt so cant do nowt, go to the local county court get a CCJ against the debtors ... that lasts 6 yrs then that is it done with!
I reckon what he/she should do is do a bunk, move to Australia and buy a property here, it's really undervalued don't you know. A few years later they'll be rolling in it.
Last edited by Pollyana; Mar 27th 2012 at 10:47 am. Reason: [QUOTE=bingobob777;9966626]