Main residence mortgage compliance on property now rented?

by Readers Question

5 months ago

Main residence mortgage compliance on property now rented?

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Main residence mortgage compliance on property now rented?

I took out a mortgage in 2007 using a broker for a property, which at the time was our residential property. In 2008 I took another mortgage to buy a second property which then became our residence , with our first property being rented.

During the process of obtaining our second mortgage, we contacted our first mortgage provider to inform them of our plans to put the property on rent and if this would be within the terms of the mortgage. The mortgage provided informed us that they had no issue.

Over time our mortgage has been taken over by another management company, and we were informed of such but did not have to sign any document, we simply kept paying the monthly bill.

We have now received a letter from the new mortgage management company stating that it has come to their attention that the property is being rented and that this is in breach of their terms and conditions. They have asked us to provide full details of the rental agreement, which I am happy to do.

All our mortgage payments are and have been made on time so we are up to date, but obviously my worry is that they come back and request that the property is taken off the rental market. As we originally clarified the intention with our original mortgage provider, had no say in the mortgage being taken over or transferred to the new provider, can anyone advise on what our position would be should the new provider object?

Unfortunately we are not is a position to pay off the mortgage.

Ian



Comments

Neil Patterson

5 months ago

Hi Ian,

Usually when you get consent to let from a lender it is on a temporary basis and at some stage, if it is to be permanent, they will want to switch you to their own BTL product range or ask you to remortgage to another BTL lender.

It is rare for permission to be written into a residential mortgage contract allowing the property to be let.

Therefore you need to consider working with the new lender to obtain consent or see if you can remortgage to a BTL either with the same lender or move to another.

Michael Barnes

5 months ago

Look at what he original consent was.

If no time limit, then I would say that you should have no problems. Show the new lender the permission you obtained.

John Constant

5 months ago

Hi Ian,
you mention in your text "over a period of time", so I assume that it has indeed been quite a while.

If this is the case, is there a rock solid reason why you still have it on a residential basis? I suspect that you are still on the lenders SVR, because the new lender seemed to be in the dark about your situation, until recently. Why not put a BTL mortgage the property? Do you need it on a repayment basis (if that's what it is on at present)? Have you considered Interest Only, as this is purely an investment property now? Chances are, you are probably paying more on a residential SVR than a good BTL rate. Swapping to a BTL mortgage would make the problem go away, and also give you a more appropriate form of borrowing.

If your intention is to keep the property on a repayment basis, you also have the option to take it on Interest Only, but make a monthly over-payment, thereby effectively keeping it as a repayment mortgage.

If you would like to chat through the options, please fee free to contact me.

H B

5 months ago

You must be on an SVR, paying around 4%, so if you remortgaged to a BTL, you would certainly pay a lot less. You did not mention your LTV, but I guess it is low enough that remortgaging should not be a problem.

Jan Martin

5 months ago

I too took out a mortgage in 2007 through my broker with Mortgage Express. I was of the understanding that the mortgage was a residential self cert .
I was told a few days ago by a third party that the Regulated Mortgage was a buy to let .
I do have buy to let mortgages with mortgage express which have now been transferred to Jasper but the regulated account remains with Mortgage Express.
Would be grateful if anyone can shed some light on this .


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