Originally Posted by dbd33

It seems to me that the options are:

- rent it out, don't tell the lender and hope not to get caught. This gets messy because the lender needs an address for correspondence and, if that's not the house, they'll wonder what's up. You can't have the post forwarded forever and, anyway, that's not very reliable. If you use a foreign address they'll work it out exactly, if you use a friend or relative's address in the UK then that probably is fraud, besides which, they'll still know you're not living in the house.

- negotiate a mortgage that allows rental use. Make a loss on the rent, hope for a recovery in house prices to make it all worthwhile. The merit of this depends a bit on the likelihood of wanting to move back.

- sell, live with the loss.

- don't emigrate. Live in the house. You don't recommend moving to Canada do you DBD lol
None of these, except perhaps the last one, look like great options but it's hard to see how, after twelve years of owning the thing, you have no equity in it. I'd have thought this more commonly to be the case for someone who's owned the house for a much shorter period.

None of this is "fair" of course and, to compound the problem, emigrating to Canada means giving up indexing of any state pension you might receive.

Originally Posted by mags1972

Theoretically if we were to rent to a trusted friend with family picking up our mail on a monthly basis the lenders may never find out

Originally Posted by delsol79

I tried to sell my house in 2007 but it remained on the market for 6 months empty so I decided to rent it. I called my mortgage provider (HSBC) and asked for permission which was granted for 12 months after which they said I would have to move to a buy-to-let. I am currently on a tracker!

Well I have rented that property ever since and after the 12 months I just did nothing and they did nothing. My address was changed with the bank at the time as well.

I will continue on this path until forced to do something different and since that day I have never rang the mortgage team about anything as I don't want to highlight my case.

I know this is clearly wrong but I see it as a battle of principal The rent would come nowhere close to the mortgage they would move me to and I would therefore have to sell. As it stands the bank gets their interest and I get my mortgage paid.

Now we are moving I plan to change my bank address once more, this time to my parents in N.Ireland so I hope this causes no further issues.

Originally Posted by Almost Canadian

To those that hope the lender will turn a blind eye: that is a very risky business. The fact that it will cost you more money to "do the right thing" is not the lender's fault. Best of luck if it all goes pear shaped.

Originally Posted by Cape Blue

One assumes that the lenders are justifying a higher rate for a buy-to-let mortgage based upon some sort of risk that these types are more likely to default? I wonder if any data bears this out, or whether the higher rate is more based upon trying to extract some of the landlords profit?

Originally Posted by Almost Canadian

It doesn't matter why they charge a higher rate. That forms the offer and acceptance part of the contract. You either accept it, or you don't. Most lenders' terms of the mortgage state that you cannot use the property as a rental property during the time that it is charged with the mortgage. Doing so puts you in breach of the terms of the contract with the result that the lender may be able to seek repayment of the mortgage in full, immediately.

A nightmare scenario if they do

Originally Posted by delsol79

I tried to sell my house in 2007 but it remained on the market for 6 months empty so I decided to rent it. I called my mortgage provider (HSBC) and asked for permission which was granted for 12 months after which they said I would have to move to a buy-to-let. I am currently on a tracker!

Well I have rented that property ever since and after the 12 months I just did nothing and they did nothing. My address was changed with the bank at the time as well.

I will continue on this path until forced to do something different and since that day I have never rang the mortgage team about anything as I don't want to highlight my case.

I know this is clearly wrong but I see it as a battle of principal The rent would come nowhere close to the mortgage they would move me to and I would therefore have to sell. As it stands the bank gets their interest and I get my mortgage paid.

Now we are moving I plan to change my bank address once more, this time to my parents in N.Ireland so I hope this causes no further issues.

Originally Posted by Cape Blue

I know it doesn't matter why contractually, I was merely interested if there was some sort of risk justification or whether BTL was just a fatter market for them.

For someone like mags who is already going to be underwater in equity, I am not sure the downside risk is particularly high if the lender wants repayment in full immediately - to an extent, mags now has the cards as the lender would crystalize the loss in this instance and then have to chase mags who is now living abroad for the shortfall.

Originally Posted by Almost Canadian

It doesn't matter why they charge a higher rate. That forms the offer and acceptance part of the contract. You either accept it, or you don't. Most lenders' terms of the mortgage state that you cannot use the property as a rental property during the time that it is charged with the mortgage. Doing so puts you in breach of the terms of the contract with the result that the lender may be able to seek repayment of the mortgage in full, immediately.

A nightmare scenario if they do

Originally Posted by Almost Canadian

Not really. The lender would seek repayment of its loan and, if Mags was unable to do so, would foreclose on the property. The original mortgage and costs would likely be paid from the sale of the property. The issue would then be the default on full payout of the remortgage (this may be the same, it may not).

Chasing someone in Canada for repayment of a judgment in the UK is very easy. When I practised in the UK, I did it all the time. The initial application to transfer the UK Judgment into a Canadian one will occur relatively quickly. If that was achieved, Mags will struggle with obtaining Canadian credit. How many Canadian creditors would want to lend to someone who, shortly after landing in Canada, has a Canadian judgment?

Originally Posted by Cape Blue

In my experience, lenders get shirty when customers don't pay. If mags is paying (albeit through letting AND ensuring the correct landlords insurance), there is very little incentive for the lender to foreclose as this would ensure that the house sells for less and they then have to chase mags in Canada.

I don't see it likely that in the current climate, lenders would be searching their portfolios for customers who are still paying their mortgage and trying to find loopholes (such as letting) to instigate a negative equity sale and multi-country legal case. It only seems like a downside for both the lender and the borrower.

If mags has to sell now without letting and the property is underwater, he/she will have the same problem regarding the shortfall and potential credit issues if the lender decided to chase them.

Originally Posted by Almost Canadian

...Chasing someone in Canada for repayment of a judgment in the UK is very easy. When I practised in the UK, I did it all the time. The initial application to transfer the UK Judgment into a Canadian one will occur relatively quickly. If that was achieved, Mags will struggle with obtaining Canadian credit. How many Canadian creditors would want to lend to someone who, shortly after landing in Canada, has a Canadian judgment?