Mortgage lender insisting on 6 month AST for product renewal?

by Readers Question

10:10 AM, 10th March 2020
About 6 months ago

Mortgage lender insisting on 6 month AST for product renewal?

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Mortgage lender insisting on 6 month AST for product renewal?

My Buy to Let mortgage is coming up for renewal in June. My existing tenancy agreement ends in mid May. The lender is insisting that I have a 6 month AST in place when I renew the mortgage – is that normal?

My current tenants would like to extend but with rolling 2 months notice which I am ok with, but to satisfy the mortgage lender I’d have to get them to commit for at least 6 months.

Should I just shop around for a different mortgage or is this 6 month minimum AST normal for a mortgage renewal?

Many Thanks

Simon



Comments

Ian Narbeth

11:56 AM, 10th March 2020
About 6 months ago

Hi Simon
Normally the mortgage lenders like to see a six month tenancy but don't look too closely into it. So ask your tenants to sign a new six month lease with a rolling tenant break option.

Mark Alexander

1:53 AM, 11th March 2020
About 6 months ago

Hi Simon

What to stop you giving your tenants a new month AST and then having a separate side agreement which you both agree to, and which overrides the AST?

Helen Morley

13:34 PM, 13th March 2020
About 6 months ago

I wonder what will happen to all such contracts when S21 is abolished. Whilst the name AST may be retained, lender's security will presumably be compromised. Wonder if the government will legislate to provide a limit that lenders can charge to alter contracts to reflect that change.

Mark Alexander

13:58 PM, 13th March 2020
About 6 months ago

Reply to the comment left by Helen Morley at 13/03/2020 - 13:34
Rumor is that it will be highly unlikely that lenders security will be compromised. Time will tell

Ian Narbeth

14:18 PM, 13th March 2020
About 6 months ago

Reply to the comment left by Mark Alexander at 11/03/2020 - 01:53
It may not be necessary (and IMHO it may be unwise) to do this as lenders often just tick the box for there being a 6 month tenancy. I am wary of secret side agreements because if the lender asks for a copy of the tenancy agreement and the LL just sends the AST and not the side agreement, there can be trouble later. If the lender finds out, especially if the LL has been granted a consent to the letting because the lender might say it has been procured by concealment.

Kate Mellor

21:43 PM, 13th March 2020
About 6 months ago

I’d get some quotes. A landlord can’t force a tenant to sign a new fixed term agreement. I’ve usually been asked to tell the solicitor in writing that my tenant is currently on a statutory, or contractual periodic tenancy if the fixed term has ended. Get your solicitor, or mortgage introducer to speak to the lender about it. If you can’t get any sense out of the lender, but you do want to use them then go with the break clause suggestion and hope your tenant is happy to sign it for you. It’s quite frustrating when they stick you with these daft conditions.


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