Overseas and need to switch from Resi to Buy to Let

by Readers Question

8:23 AM, 17th February 2016
About 3 years ago

Overseas and need to switch from Resi to Buy to Let

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Overseas and need to switch from Resi to Buy to Let

In a nutshell, I left the UK to live overseas a few months back. I have a pot of money I’m living off and then in a couple of years I will sell 1 or 2 of my properties to pay off the others and live off that income (with house prices increasing, I wish to delay this). pinnochio

My question is that I should have told my lender I had moved out my residential home when I left, but just did not get round to it. I now need to tell the lender I wish to switch to a buy to let to increase my cash flow and want to extend the mortgage term.

Do you think if I speak to the lender over the phone they will increase the mortgage term (which will reduce my monthly payments) while switching to the buy to let or am I opening a Can of worms telling the lender which yes I know legally I should have?

They may just switch me to a buy to let deal (at a cost) and wish to keep the mortgage term as currently is thereby increasing my monthly payments, which is the complete opposite of what I’m trying to achieve.

A consent to let is only 12 months so not really what I want as am not planning to return is honesty the best policy?

Or will it just cost me?

Paul



Comments

John Constant

9:26 AM, 17th February 2016
About 3 years ago

Paul,
a lender is not out to punish you for letting your property under the terms of a temporary absence. In ordinary circumstances (usually if your mortgage payments are up to date) a lender will quite happily allow you to let your property, usually for up to 2 years. Yes, there might be a small admin payment, or perhaps a small increase in rate, but at least you will sleep easier at night. If the lender found out that you had let the property without permission, you will have broken the terms of your mortgage agreement, and they could call the mortgage in. A very difficult situation to deal with when you are thousands of miles away from home.

If your absence is going to be a longer one, or permanent, you should consider switching to a BTL mortgage. One option that you have here is to switch to an interest only deal, which will lower your costs. If you want to eventually own the property outright, you can always overpay on your interest only mortgage. Most mortgages usually have a 10% overpayment option (10% of the outstanding balance, at the start of the year or anniversary of the date that you took out the mortgage).

In summary, bite the bullet - tell the lender, sleep easy at night!

Zlatko Zimonjic

9:44 AM, 17th February 2016
About 3 years ago

Hi Paul,

I was in the same situation as you a couple of years ago. When I phone the lender they didn't even ask me when I left the property. They assume you are leaving right now, and they can't really check anyway. They just let me let it at my current resi mortgage, at a fee of about £300.

Lenders are all different and you can't really know what they can offer you before you speak to them. Whether they'll let you switch to buy to let or no, only they know. It depends on some parameters that matter to them at this point in time. Then at other times it will be different. There is only one way to know, speak to them.

Good luck.

Marcus

9:49 AM, 17th February 2016
About 3 years ago

Reply to the comment left by "John Constant" at "17/02/2016 - 09:26":

Hi John,

Good advice, appreciate your input. Yes, you are right, I should contact the lender and that's what I think I'll now do now.
I will consider the interest only option, or if I can extend the term on a repayment that would probably be preferable.
Thanks again for your comment.
All the best
Paul.

Marcus

9:52 AM, 17th February 2016
About 3 years ago

Reply to the comment left by "Zlatko Zimonjic" at "17/02/2016 - 09:44":

Hi Zlatko,

Thanks for the comment, yes - I think going to email the lender later today.
I'll post an update once I know the outcome.
Cheers

Paul

Jerry Jones

10:09 AM, 17th February 2016
About 3 years ago

Santander gave me full-term (December 2021) permission to let for a fee of £1000-odd in 2008. Which was nice, as the pay rate is 0.49% over base, interest-only!

John Constant

10:11 AM, 17th February 2016
About 3 years ago

Reply to the comment left by "Jerry Jones" at "17/02/2016 - 10:09":

Result Jerry!

Luke P

10:16 AM, 17th February 2016
About 3 years ago

Reply to the comment left by "Jerry Jones" at "17/02/2016 - 10:09":

A little off-topic, but that sort of rate remided me of my best deal to date which was 0.36% UNDER base. When we first hit the current BBR low, I received a letter informing me my monthly mortgage payment was a staggering £6.04! I kept the letter and framed it 😀

Marcus

10:16 AM, 17th February 2016
About 3 years ago

That would be a great outcome Jerry!

Jerry Jones

10:21 AM, 17th February 2016
About 3 years ago

I grumbled like Hell at the time. £1000 felt outrageous but my broker couldn't find me a better deal so I accepted it. Then base rates started dropping . . .

Luke P

10:22 AM, 17th February 2016
About 3 years ago

Reply to the comment left by "Jerry Jones" at "17/02/2016 - 10:21":

I hope you get something similar, Paul but the world's a different place since 2008.

I think more realistically they will want an admin fee AND to increase you rate (due to the 'risk').

Still, it means sleep-filled nights...

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