Penalised by IF for renting?
We rented our property to tenants when moving overseas six years ago and have never missed a payment. Intelligent Finance, our mortgage provider, charged an extra 1% on our mortgage as a risk premium under the terms of our mortgage.
As a percentage of the overall margin IF charge as their mortgage rate this ‘risk premium’ seems both outrageously high and entirely unjust.
Appreciating it is a condition of the mortgage and IF’s stated policy, has anyone tried to appeal such a charge or sought redress?
If so, have their claims been successful?
If not is there any other avenue open to us to seek such redress and repayment of the extra we have paid as this does feel like a totally unfair cost that we have suffered?
Craig
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Member Since February 2011 - Comments: 3453 - Articles: 286
10:14 AM, 15th December 2017, About 8 years ago
Hi Craig,
I am assuming it was a residential mortgage to start with?
If the increased margin penalty is in the mortgage terms and conditions it is unlikely they will back down. You can of course make a formal complaint to the lender and then take it to the ombudsman which will cost IF £500, but I don’t see them upholding the complaint in this instance unfortunately.
Member Since June 2013 - Comments: 3237 - Articles: 81
10:48 AM, 15th December 2017, About 8 years ago
I don’t think it’s bad loading 1% to switch from Residential to then renting it out.
Some Lenders may want more hoops to jump through.
Comments: 297 - Articles: 1
1:09 PM, 15th December 2017, About 8 years ago
Abbey (or was it Santander by then?) charged me £1000 for Permission To Let. I now have a let property with a mortgage at 0.49% over base, so it turne dout quite well for me 🙂
Member Since October 2016 - Comments: 189
1:32 PM, 15th December 2017, About 8 years ago
Dear Craig
You’re asking for something that wasn’t part of the original agreement so, to some extent, you’re beholden to your lender. Whether or not 1% gives you an excessive interest rate really depends on what the total rate is; could you do better by getting a BTL mortgage? Possibly not by the time you factor in charges. If you want to be a professional landlord, and let the property indefinitely, then it may be worthwhile changing.
Bear in mind that the risk has now changed and your lender may take a dim view of let houses, especially now it can be harder to regain possession due to the compliance.
If this has been going on for six years, why is it a concern now?
Graham
Member Since December 2015 - Comments: 77
1:44 PM, 15th December 2017, About 8 years ago
I agree with the above comments. Your lender has acted according to the T&Cs you’ve signed up for. Their business risk is now akin to BTL. And since BTL mortage rates are higher, lending standards far more stringent and set up fees a lot more expensive than primary residence mortgages, I wouldn’t call their approach unfair. Perhaps do an exercise of calculating what your costs would be if you were to switch to a BTL mortgage now. You may find out you are actually getting a good deal.
Member Since July 2015 - Comments: 344
12:23 PM, 16th December 2017, About 8 years ago
If you don’t like it, move to a BTL mortgage. And stop moaning.
It is in the contract for a reason – BTL mortgages have always been more expensive
Member Since June 2014 - Comments: 325
10:35 AM, 17th December 2017, About 8 years ago
Hi Craig – as mentioned by others you may find your “current” mortgage rate with the 1% premium is still lower than a BTL variable rate, and assuming you will at some point return to the UK consideration of a BTL loan is perhaps not a sensible option.
Allan