Letting my house without telling the mortgage company

by Readers Question

21:45 PM, 11th March 2013
About 8 years ago

Letting my house without telling the mortgage company

Make Text Bigger
Letting my house without telling the mortgage company

Letting my house without telling the mortgage companyWe live in a small two bedroom house with two children already and I have now found out I am pregnant again.

I rang the mortgage and asked about switching to a buy to let mortgage so we could let our house and rent instead . They made it sound really easy.

The paperwork came and it turns out we don’t fit about three of the criteria for a buy to let mortgage.

Now I don’t know what to do. It looks like its going to be impossible to get a buy to let mortgage.

Our credit it bad so switching to another provider is probably not an option either.

We now seem to be left with three bad options

  1. Let out the house without the mortgages consent but I am worried that a landlord insurance company might inform them or insurance would not pay out in the event of a claim.
  2. We sell the house at a big loss as there is no money left in it then have to pay off the rest of any debts secured against the house or
  3. Live in a very small house with either 3 kids sharing a small room or a child in the room with us.

We really are stuck at the moment as all options seem risky and stupid.

Any help or any other options would be greatly appreciated!

Many thanks

Isabelle Smith


Share this article

Twitter Facebook LinkedIn

Comments

9:34 AM, 14th March 2013
About 8 years ago

Isabelle,

I have a property that I lived in that was the opposite to your situation; at the time I was single and was in a 4 bed house!

Dependant on your mortgage company(?) the process will be slightly different but with mine, Nationwide, they have a form you can download from there website and fill in and send back. They granted it for 3 years on the condition the rent was making a profit on the mortgage payments so check this would be the case. It will make your case stronger. On some cases they also add a letting fee of 1.5% after 6months so make sure you can afford the increased payments.

I happen to also know that Santander simply ask for a written letter detailing reasons and a cheque for a set fee of £295. Although I have also heard (not confirmed) that they can ask for a higher fee if they can provide written evidence to support the reasons why.

As Mark pointed out, your best option is to write to them and ask, have a look at there website and search for permission to let conditions. Also have a Google and see if you can find anything for your mortgage company?

@Mark Alexander, I'm not sure your advice is wholey correct; I believe that if you do not have consent even the landlords insurance can be void as when getting my properties insured they did ask this question on the phone and pointed out that this was written into the policy, by signing and agreeing to the terms you are stating you have permissions to let.

I would strongly advise against renting out without consent and would get back in touch with your mortgage provider.
Who is your mortgage with Isabelle?

Paul

18:35 PM, 14th March 2013
About 8 years ago

Hi thanks everyone for your helpful comments!
Paul our mortgage is with NRAM! Is there a difference between getting permission to let your house and switching to a buy to let mortgage. We just rang and said we wanted topotentially let out our house out and they sent details on changing to a buy to let mortgage, a big list of requirements to be accepted (about three of which we don't meet) and some questions to fill in. I just find it silly they have so many requirements at the end of the day as long as the mortgage is being paid should it really matter how!

4:33 AM, 15th March 2013
About 8 years ago

One should NEVER call a mortgage company giving your account details!
Always call making a generic query about a certain mortgage product.
the point is if you need consent to let and you cannot comly with the terms for conversion to let to buy mortgage you are stuffed; the cat is out of the bag.
Yes if you insure a property with LL insurance whilst a resi mortgage is in force there is the possibility that the insurance won't pay out.
No insurer has ever asked about my mortgage and what type it is.
i suppose it is possible if the insurer is trying to wriggle out of a claim.
You are damned if you do and damned if you don't.
You either rent the property out and do not advise the mortgage company you are.
Or you do rent it out and take the risk of insurance not paying out in the event of total loss.
This means that with no consent to let you face having to rent the property out as you need to because of domestic circumstances; but cannot afford to convert to a let to buy mortgage because of the onerous and unachievable terms.
After all the whole reason you need to let is because you cannot rent and afford the mortgage at the same time.
You will therefore HAVE to take a risk and let out with NO consent to let; you have no choice except for staying in the property as residential occupiers.
There are millions of resi owners (Accidental Landlords), letting out in contravention of their mortgage policies as they can't sell as they are in negative equity and they cannot meet a let to buy mortgage condition of additional interest rate and extra capital injection
I know what I would do in such a situation.............................and I would have my fingers crossed most of the time!!!!

Antony Richards

8:41 AM, 15th March 2013
About 8 years ago

Terrible advice.
DO NOT LET YOUR HOUSE WITHOUT MORTGAGE COMPANY'S WRITTEN CONSENT.
Simples.

14:26 PM, 17th March 2013
About 8 years ago

Unfortunately it is not that simple.
Do you suggest the person is stuck in the existing house!?
If they are refused consent to they are definitely stuck.
If they are given consent but cannot meet the usual stupid onerous requirements of higher interest rates; breaking possibly their cheaper long term resi mortgage rates, never to be got back again, and additional capital requirements which they could not afford they are stuck.
Whereas if they choose to let out nobody will be any the wiser providing they stay on the electoral roll; pay the mortgage and hope the house doesn't burn down.
Make sure they have LL insurance etc.
Unfortunately the strictly best way is not a lot of use to this person; as indeed has occurred to hundreds of thousands of 'accidental LL'; who like it or NOT have taken my suggested possible course of action.
It isn't correct; but most mortgage companies know this goes on an providing they aren't told and the mortgage is paid they let sleeping dogs lie!!
It is only the moribund property market; lack of mortgage finance and large deposit requirements which is causing this situation; leaving 'accidental LL little alternative than to play fast and loose with their mortgage conditions.
I very much doubt whether these people can afford to rent and leave their resi property empty and pay the mortgage aswell!
What if they had to move to the other end of the country for work and couldn't sell!!
Do you suggest they move and pay rent and then be bankrupted because they could not afford their mortgage on a house they couldn't sell!
It is all very well quoting what one should do; but when that advice will invarably stop the person moving or working the system so they can move without loss; it really is no help at all!!

Mark Alexander

14:40 PM, 17th March 2013
About 8 years ago

@Paul Barrett - your latest comment pre-supposes that mortgage lenders will withhold permission to let. I doubt that will happen, especially under the circumstances of this case and also in the other examples that you have cited. If permission to let is withheld then I suspect the Financial Ombudsman Service would uphold a complaint from the borrower.

However, if a borrower asks a lender a different question, e.g. "can I convert my mortgage into a buy to let", that's a very different scenario altogether.

Matthew Dickinson

14:50 PM, 17th March 2013
About 8 years ago

I have written before about the Newark branch of Martin and Co. but the only connection I have with them is through my property. I have suffered at the hands of other agents in Newark and therefore am keen that other people stuck in my position are not stung by the apparently cheaper agents, who then charge large repair bills, or are just dishonest. Martin and Co. have always been very straightforward, and treat the tenants fantastically.
Matthew

Antony Richards

8:51 AM, 18th March 2013
About 8 years ago

Whilst I have sympathy with all the above, those offering advice show the pitfalls of this forum - lack of detailed knowledge.
DO NOT LET WITHOUT MORTGAGEE's WRITTEN CONSENT

Mark Alexander

9:21 AM, 18th March 2013
About 8 years ago

@Anthony Richards - It's not clear who your comments are directed at. Do you disagree with my opinions and if so please explain why?

Antony Richards

9:42 AM, 18th March 2013
About 8 years ago

Mark on the assumption you are referring to Antony Richards, most of your opinions are directed at the attitude of the mortgage company which are basic common sense and are in effect opinions. I did already advise you that your worst case scenario was incorrect.
My stance is coming from the legality of letting a house without mortgagee's consent which is why I have put in bold twice not to do it. By the way, it is do as I say not as I do, but when it comes to offering advice one has to offer the correct advice.

1 2 3 8

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Absent freeholder since purchase in 2011 suddenly appears?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More