Residential mortgage but renting the property without consent!

Residential mortgage but renting the property without consent!

14:01 PM, 6th January 2014, About 8 years ago 14

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Hello readers,

For the last 3 years I’ve rented my flat on a residential mortgage whilst simultaneously living in a rented house. This is because of a change of a job which meant I had to move. I however couldn’t sell the flat due to negative equity. The flat contains roughly 15% equity and I have some savings.

I’m aware that I shouldn’t have done this, but the alternative was to default on the mortgage.

I want to get this sorted ASAP because it is now giving me sleepless nights. My options are therefore:

1) My current tenant has expressed some interest to buy from me, but lacks savings. I could therefore pay his deposit on a mortgage for him

2) Look for a BTL – this would need to be between a 75% to 80% LTV! ideally 80%, which seem difficult to get because I’m renting myself

3) Bury my head in the sand and hope that my mortgage provider doesn’t find out.

2 is probably the most likely outcome. If I did choose 3, if they did find out, would this make it difficult for me to simply switch to a BTL with someone else, should my mortgage provider call in the mortgage?

Many thanks Darren underthecosh



Comments

by Jeremy Smith

19:40 PM, 6th January 2014, About 8 years ago

Reply to the comment left by "Neil Patterson" at "06/01/2014 - 16:45":

Hi Darren,

Although Neil's advice is very good, and I would take it if I were you,
I would do something first:
I would, using a broker, since they have access to all the products out there, make sure that there is a provider who WILL give you a BTL mortgage at 80% and who would take over from your existing provider.

The reason I say this is, by experience of a friend, if you declare your hand completely to them, they hold all the cards against you:

Be VERY careful how you tread especially if you have a Bank of Scotland product, I think that includes Lloyds.
My Friend declared his hand, they agreed to renew his mortgage at around 40% LTV, and then when they had TAKEN from his account £20,000 which he had 'provisionally' agreed to pay into the mortgage account, they then changed their mind and refused to continue his BTL mortgage with him.
...Demanding full payment of the remaining £70k.
...He had a hell of a time getting another product, took months to sort out, and the ironic ending was that the provider he finally got was underwritten/subsiduary of Bank of Scotland !!

Moral of Story:
....Make sure you have a provider who is willing, BEFORE you ask your exisitng provider, just in case.

by Ann

10:53 AM, 7th January 2014, About 8 years ago

Darren
As many lenders have no objection to issuing consent to let it would be useful to know who your lender is, fellow readers may know their policy. Once you know this you can work out your best option. It could be as simple as asking for consent (from today). Is it not in the FAQ on the website? Ask at your local branch or get someone to do it for you. I paid £95.00 every 12 months for permission.
I previously worked in an Admin department for a high street bank dealing with these requests and the criteria/process was; account in arrears = no, consent given (charge fee & update correspondence address). That was it.
Your lender may not have such a straightforward policy but until you find out you cant move forward or get any sleep!

by

12:48 PM, 7th January 2014, About 8 years ago

Ann,

Well said (and what a delightful name)!

Lenders have to accept that an individual's circumstances can - and do - change.

It would be against human rights to suggest that this is not allowed.

Most lenders are pretty reasonable.

I had a residential mortgage with one High Street lender on my flat in London, but when I left my job in London, I needed to turn it into a BTL.

I phoned the bank and told them and asked about moving it onto a BTL, and they said "no worries, it's fine to keep it as it is". It came off a fixed rate and went onto a tracker, and I phoned again to ask if it was okay and that they are put on my file that it was rented out, and they again said "yes" and confirmed that there was no need to change from my current product.

As you say, it really is best to contact the lender and ask as there may be nothing to fear.

by Sarah Woodhouse

19:01 PM, 29th June 2015, About 6 years ago

Hi, did anything come of this?


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