tinytears

OK this is now becoming more and more of a viable option. So can I ask some questions:-

1) If you rented your house out did you go into an interest only mortgage?

2) Did you tell your mortgage company that you were moving abroad?

Is there anything we need to consider about this mortgage wise? We know we need to get a landlords insurance policy is there anything else?

JoolsGod

We are doing exactly the same as this at this very moment. We have had no joy in selling our property so we are remortgaging to release some of our equity to help set us up over there. We are getting an interest only mortgage and although i wouldn't usually entertain having one it is the most cost efficient way to enable us to do what we want to do.

I am unsure about your question 2, although i do know you need to let them know its a "buy to let" mortgage. We have a financial advisor sorting it all out. Its not the ideal scenario, like you we wanted to sell but i am now thinking that maybe it is a good idea as if it goes wrong for whatever reason in Canada and we have to come back then at least we we will have a home.

Just waiting for the pesky LMO now!

Good Luck.

JonboyE

Yes, you must tell the mortgage company that you will be abroad and will rent the house. There is almost certainly a clause in the mortgage agreement that you are the owner/occupiers. If you rent it out without telling them you will be in breach of the terms of the mortgage and they are entitled to call the loan. You would then have to sell the house at short notice. If the house sold for less than the mortage (which I assume it would in a forced sale given your previous posts) then you would still owe the mortgage company the difference, plus their costs.

LynseySmith

Looking for advice on exactly this same issue too. We currently have an original low-rate tracker, so the repayment will be quite low and all our costs should be covered. Therefore don't want to change this for a new buy-to-let type mortgage. Thought it would be OK to retain current mortgage as not purchasing another UK property. Realise you have to tell bank you are renting out and maybe upgrade insurance.

If anyone has done this recently can you advise????

jimf

I'm making arrangements to rent the house in the UK. I wrote to the building society to ask for permission to rent the house half expecting them to insist that the mortgage be transferred to "buy to let". They didn't do that but did say they would increase the interest rate by 1%. I will have to make arrangements for buildings insurance as the present insurers say they don't insure let properties.

gryphea

We too are on an original base rate tracker and we have rented our house out. We have to get the building society's permission, which requires tenant details and copies of contracts. We pay a 0.5% penalty for renting it out- but this is way cheaper than going to a buy to let.

nooka

It depends on the mortgage company. I'm with the Nationwide, and they said that it would be fine for the next two years, but after that I would have to move providers if I was still letting, as they don't do buy-to-let

nooka

Oh, and I forgot to say, I have it on the same terms that I had originally (which was the last period of a fixed rate, now on standard variable)

Cape Blue

I would go interest only - give yourself more wiggle room.

Up to you on the mortgage co, if you tell them they will stiff you for an increased rate.

Landlords policy for buildings, you can also add legal cover (lawyer fees for getting tenants out), plus emergency repairs (boilers always fail on a Sunday night, the insurer controls the plumbers and pay the first 500 quid)

Corgi gas test, some people do an electrical test, you will need an energy effy cert. I put in some basic smoke detectors and a couple of fire extinguishers.

As well as the leaving the country P85 you will need to complete a NRL1 so you get the rent in full and can undertake an end of year tax return, otherwise the agent must take the tax from you each month.

Letting agents are completely an utterly useless in every way, shape and form - once you have that understanding under your belt & your expectations are on the floor, it won't seem so bad dealing with them. They will push for 15% +VAT, you might beat them down to 12%+vat (for full management). Get them to email you your monthly statement.

The house is no longer your home - just a box you rent our for money. Stick at least 10% of gross aside for repairs and wear & tear - you'll be repainting before you sell or when you move back in, let alone new carpets etc.

If you have a nice garden consider getting it managed - tenancy will say the tenants should do it, they won't until the week before they move out, it will always look rough afterwards.

I'm sure there are things I've forgotten.

tinytears

Thank you. That is really helpful. Was it difficult to get the mortgage co's permission - I've heard that they can turn it down which would leave us in the brown stuff!

Excellent, we are initially on a TWP so we thought about telling them that we would let it for the term of the work permit rather than permanently. I hope our mortgage providers do the same, that would solve a lot of problems.

Thank you for such a great reply. We ideally want to go onto interest only, we don't know whether they will let us or not though if we want to rent it out as well.

We have zero emotional attachment to the house so I'm not overly bothered about who comes in here, we will strip it bare of everything and leave a box with four walls and a bit of carpet! Garden is just grassed over anyway!

Very good points thank you, I will save all this and go back to it as we start the job of arranging it all. Thank you.

Cape Blue

No problem, good luck with it.

gibsonslanding

you MUST tell your mortgage company......bottom line. if for any reason, there is a future problem, they will demand thier remaining mortgage money owing and you will be stuffed.......they WILL take your home from you in a flash, you will have zero credit rating and no money......i've just spoken to mine about two things......1) renting! no probs, we are on a interest only BUT they will immediatley put a stop on any more borrowing, if need be, from the point of renting and will stipulate a one year agreement. can be renegotiated down the line. 2) leaving the house empty.....they don't care basically, as long as the mortgage is being paid and as long as adequate house insurance is in place (the underwritters want to see the agreement) and that it's being 'maintained'......meaning a company or friends and family......cop out for them, is that if it's not being 'maintained' then you are de-valuing 'thier asset' let alone your asset!!!!!!!

tinytears

Have spoken to two mortgage advisors today to get their individual opinions and advice and both said the following:-

* Drop to an interest only mortgage, if asked then tell the bank that we either want a short term break from paying off at the higher rate given the economic situation (and this apparently is quite acceptable and quite normal) and ask to be transferred for a period of two years to interest only. Generally they will come back with one year then a review. Or if they query that tell them that we will take out an ISA to put a smaller amount away each month and that should be ok.

* Interestingly both said off the record not to tell the mortgage company - that they would object to the change in circumstances (ie, moving abroad) or worse tell us that we weren't allowed to move abroad due to the terms of the mortgage. They said the most important thing was to get landlords insurance, have post redirected and do it that way. FOR THE RECORD I AM NOT DOING THIS I WOULDN'T BE ABLE TO SLEEP AT NIGHT, I just found it interesting that two people totally unrelated said the same thing.

Cape Blue

I have done exactly as your brokers have suggested in the past - the downside of telling your mortgage provider you are letting it out is that they will use it as an excuse to gouge another percent or two out of you plus a potential set-up charge. AS they say, key is to ensure that their/your asset is protected with the correct landlord/lettings insurance and that the agents use assured shorthold contracts etc.

gibsonslanding

[QUOTE=tinytears;7167502]Have spoken to two mortgage advisors today to get their individual opinions and advice and both said the following:-

* Drop to an interest only mortgage, if asked then tell the bank that we either want a short term break from paying off at the higher rate given the economic situation (and this apparently is quite acceptable and quite normal) and ask to be transferred for a period of two years to interest only. Generally they will come back with one year then a review. Or if they query that tell them that we will take out an ISA to put a smaller amount away each month and that should be ok.

* Interestingly both said off the record not to tell the mortgage company - that they would object to the change in circumstances (ie, moving abroad) or worse tell us that we weren't allowed to move abroad due to the terms of the mortgage. They said the most important thing was to get landlords insurance, have post redirected and do it that way. FOR THE RECORD I AM NOT DOING THIS I WOULDN'T BE ABLE TO SLEEP AT NIGHT, I just found it interesting that two people totally unrelated said the same thing.[/QUOTE]

i was told this too, by a mortgage brooker.......however, he also said that IF you get caught out, it's a major problem, because you have broken your agreement with them and they will take your house, if you do not repay immediatley any monies outstanding to them!!!!!!!.....to my mind, it's not the brooker who has to deal with this and he can sleep well at nights!!!!!!!!