British Expats - Question for those that rented the house out

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Re: Question for those that rented the house out

I had a mortgage with the Woolwich - I did tell them and I also took out landlord's insurance. I just didn't want anything to go wrong and end up having to fork out a fotune if there as an emergency situation like a house fire or something. I did it to get peace of mind as I had enough else to be thinking about when I moved. I was fortunate in that I was able to meet the tenant before I left the UK and knew that he was a property flipper between homes.

Re: Question for those that rented the house out

[QUOTE=gibsonslanding;7168252]

Quote:

Originally Posted by tinytears (Post 7167502)

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!!!!!!!!

Well quite.

You can understand why the bank may want to charge a higher interest rate on, what is now, a commercial rental property than on an owner occupied home. Especially when the owners are overseas it is a higher risk loan. You may not agree with it but you know you should tell the bank. Gaining a financial advantage by deception is fraud.

Even if the fraud doesn't bother you, as gibsonslanding says, there is a fair chance that the bank will call the mortgage if they find out.

There are some lousy mortgage brokers in the UK.

Re: Question for those that rented the house out

Quote:

Originally Posted by tinytears (Post 7165364)

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.

We told our mortgage company the truth, that we were going out to Canada on a 3 yr work permit. Our mortgage company (Skipton) told us in principle they would agree to letting, but what they actually do is approve the contract and the tenant- they do their own credit check, reference check etc. They do not give you carte blanche to do whatever you like. It helped that we had rent guarentee insurance, reputable letting agents and a proper contract. They only allow inital contracts up to one year, I think this is because if you default, they like to be able to get the tenants out in a reasonable timescale. So with our company you could have tenants stay more than a year but only by extending a contract, so we were on 6 month , now two month rolling.

Gryph

Re: Question for those that rented the house out

We told our mortgage company, they asked for no change in type of mortgage, no increase in interest and were happy to reduce the amount of insurance (also through them) to a level that reflected the property would be let unfurnished. We did remortgage a little bit in 2005 to fund the deposit on our place in Canada (had to put 25% down because we were not living in Canada at the time), but we have owned the place in the UK for 11 years so it still has a fair amount of equity.

I assume that the lenders are trying to protect their investment and that in our case they knew (or at least assumed in mid 2007) that they could never lose on our property if we did default so didn't penalise us.

Of course the three months where we had gone from 2 jobs plus rental income to 1 job no rental income, did make having 2 mortgages a bit of a challenge. But now we have the place in the UK rented (not covering the mortgage payments, but getting closer!) and we both have jobs over here so it is not such a worry keeping both properties.

I do sometimes think about how much we 'lost' in not selling when we moved, we had 3 people all wanting to buy the place without us even putting it on the market. But we wanted to rent so that if things didn't work out we could at least come back to a house that we were happy with.

Now we will probably be keeping the property for many years to come (can't see house prices or exchange rate improving for a long time), which means we will not have the 'lump sum' any time soon to buy something bigger here, But we are content with our 'down sizing' and it is still nice to have something in the UK in case of a *very* rainy day.

I feel for all those that are moving in the current economic climate, but I think on balance I would still choose to rent out the place in the UK if at all possible.

Re: Question for those that rented the house out

Our mortgage is with Barclays ( was the Woolwich ) and they offered a 'permission to let' rather than switching mortgages to 'buy to let'.
Means we stay with exactly the same tracker mortgage.

Re: Question for those that rented the house out

We changed to interest only and got a permission to let. For the first couple of months I was having to top up the mortgage payment as the rent didn't cover it, but now the interest rates have dropped, I'm making 200 quid a month on it - so that'll be saved for when the rates go back up. Not bothered if I make a profit, but I would like to break even and then be able to sell it when PR comes through....

EDIT: The permission to let was for a period of one year, so I'm not sure what to do when that is up, whether just to "forget" it had expired or to ask for an extension. If they refuse then we will be screwed somewhat...

Re: Question for those that rented the house out

I don't know what to do!

We are in the same position as Tiny Tears, we are in the process of applying for an interest free, buy to let mortgage to enable us to get on with the move over as the house wasn't selling. After reading this thread i got hubby to ask financial advisor if he had informed the mortagage lenders that we intend to leave the country and he said no as they may change the conditions etc. I want to insist on him telling them but hubby is worried it will all go wrong for us, just when we felt it was starting to go right!

Very depressed now! Would you all tell?

Re: Question for those that rented the house out

Quote:

Originally Posted by JoolsGod (Post 7173191)

I'm in the same position, my husband is very worried that if we tell the mortgage company it will all go wrong, so we are stuck.

My argument is that lots of people on here have told the mortgage company and had good results and it is ok.

But ...

Re: Question for those that rented the house out

Quote:

Originally Posted by G77 (Post 7172544)

Thanks G77 - can I ask when did you do this was it much before you left or did you leave it to the last minute to sort out? Also did you need to show them that you have some sort of isa or the such like set out to cover the capital?

Sorry for asking so many questions (again).

Hope you get your extension period, will keep my fingers crossed fo ryou.

Re: Question for those that rented the house out

Quote:

Originally Posted by ginge'n'jim (Post 7171602)

Our mortgage is with Barclays ( was the Woolwich ) and they offered a 'permission to let' rather than switching mortgages to 'buy to let'.
Means we stay with exactly the same tracker mortgage.

Thats good, can I ask when did you apply to them was it just before you were leaving?

Quote:

Originally Posted by Solarfish (Post 7170114)

Thanks for this. I would rather have sold, even to a break even point (ie, covering the mortgage) but I don't think we will be able to. In some ways it is good security having the house remaining here but in truth I know I wouldn't want to move back into this house - it hasn't been a great home it has been peppered with problems since we have been here. It was always going to be a stepping stone and as such I never really got emotionally attached to it, it was a house not a home - in fact when we moved in I bought the cheapest of the cheapest of the cheapest curtains and said at some point I'd get some proper ones, but six years later they are still hanging!

I hope the mortgage company will let us rent, if not we are in serious trouble.

Quote:

Originally Posted by gryphea (Post 7169803)

Lets hope that we get the same result. We are talking to letting agents and looking at insurance, I want all that in place before we contact the bank (I think).

[QUOTE=JonboyE;7168913]

Quote:

Originally Posted by gibsonslanding (Post 7168252)

There are indeed!

For me the issue isn't whether they charge more, although in truth we may not be able to afford to cover the difference in what we can get in rent as we are already paying £300 more now on mortgage (repayment). The real issue is if they say no to us letting it, that would really be a major hurdle.

Quote:

Originally Posted by TrishB (Post 7168531)

Thanks Trish, this hopefully is what we will be doing.

Quote:

Originally Posted by Cape Blue (Post 7167575)

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.

Absolutely agree but then the flip side is that I don't want them to end up repossessing under those circumstances. Maybe I worry too much.

[QUOTE=gibsonslanding;7168252]

Quote:

Originally Posted by tinytears (Post 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!!!!!!!!

Now I was told the opposite by both which is interesting, I was told that they would probably inflict a financial penalty, though they may withdraw the mortgage but then they would be able to get us a mortgage with another company - though I doubt that especially if we are abroad!!

Re: Question for those that rented the house out

Quote:

Originally Posted by tinytears (Post 7173332)

I went to see them as soon as I knew we were coming, had they not have been able to switch it to interest only, I might have had to reconsider, as we'd have been putting in 250 pounds a month ourselves at least. This was probably 2-3 months before we actually left. They agreed to switch to interest only providing the Loan to Value ratio was right and fortunately it was. Then just before we left, I called the mortgage manager and he gave me the permission to let letter, we left that till the last minute to give us the full 12 months (though I had discussed this with him 3 month previous and it was his idea to leave it till last minute). We didn't require any specifics to cover the capital, just the LTV ratio mentioned above. This was with HSBC.

Re: Question for those that rented the house out

I rang up to ask in principle, but the mortgage advisor had already told me that Nationwide would be fine about it (which they were). When I rang up I didn't give them my account number etc, just told them my circumstances and asked for advice. I think I then rang abut a month or two before we left, and they sent a letter confirming it was OK.