adam_smith Posted September 1, 2008 Report Share Posted September 1, 2008 We're 1 year into a 3 year fixed rate residential mortgage. We're going away for a couple of year, and renting out house our. On informing our mortgage company about our plan to rent our house: first they said 'no problem, they'll just add .25% to therate', which was fine. But that seemed to be a mistake, because later they said 'no, you have to go swap to a buy a let package, which entails swapping to their current standard rate + an extra 0.25 % simply because we already have a mortgage with them. Also, because we already have a fixed rate mortgage, they won't let us apply for any of their current deals for lower fixed rate buy to let. this means that our interest rate goes from just under 6, to about 7.5%, which is huge increase, much means our interest only payment will be much higher than our rental income. So, do we have any options? Eg, is it 'safe' to just not tell the mortgage company. We'd save ourselves a £140 a month! - but what are the risks. Link to comment Share on other sites More sharing options...
orchid22 Posted September 1, 2008 Report Share Posted September 1, 2008 It is upto you what you do. However if you do not get your lenders permission to let the property and they find out they could then put you on a higher interest rate staright away than they have offered or worse ask you to pay the mortgage and any ERC's (Penalties) upon demand. If you decide not to inform your lender do not change your correspondence address with them as this will raise suspicion and just keep in mind any correspondence will be sent to the let property address. Get a clause written in the tenancy agreement that any post in your name needs to be re-directed and forwarded to you at your correspondence address. Hope all goes well whatever you decide Link to comment Share on other sites More sharing options...
Melboy Posted September 2, 2008 Report Share Posted September 2, 2008 The risk of non-disclosure would be the calling in of your mortgage and all the implications that would have for you. Mel. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted September 2, 2008 Report Share Posted September 2, 2008 The risk of non-disclosure would be the calling in of your mortgage and all the implications that would have for you. Mel. Does ANYONE know of , .........or even HEARD of a lender actually doing this ANYWHERE.............'cos i havent ! The Rodent Link to comment Share on other sites More sharing options...
Trenners Posted September 2, 2008 Report Share Posted September 2, 2008 Hi, I think a more fundamental principle is at stake here. Landlords are in the BUSINESS of renting property (hopefully) for profit / financial gain. Everything should therefore be conducted in a "business like" manner. Of course you should inform your lender (that you are renting the property out) to avoid the mortgage company forclosing on you (when or if they find out). From a tenant's perspective - I would ask myself this question: If the landlord has cut corners by not notifying the lender that they are renting the property out then what other corners have been cut to save money? Gas Safety test? Electrical safety test, smoke detectors, fire safety etc etc In summary, amateur landlords give professional landlords a bad name - if you are in the business of renting then do it professionally ! Mark Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted September 2, 2008 Report Share Posted September 2, 2008 Mark ...agreed unreservedly ! But just wondered if it had actually happened to ANYONE AT ALL ANYWHERE ???!!!! The Rodent Link to comment Share on other sites More sharing options...
Trenners Posted September 3, 2008 Report Share Posted September 3, 2008 Hi Rodent, I haven't heard of it happening either ...... I would guess that banks would rather charge the landlord a punitive swap fee and interest rate to switch onto a Buy-2-Let mortgage rather than forclose on the mortgage. I still think they should be informed though and most letting agents make it a condition of contract before agreeing to market a property. Mark Link to comment Share on other sites More sharing options...
Melboy Posted September 3, 2008 Report Share Posted September 3, 2008 Does ANYONE know of , .........or even HEARD of a lender actually doing this ANYWHERE.............'cos i havent ! The Rodent Possibly not but has anyone ever actually told you. Your property insurance would be invalid for starters and as we all know Insurance Companies would look to the flimiest of excuses not to pay out in the event of a claim and not informing the Mortgage Lender would be a copper bottomed excuse not pay out on any claim. Mel. Link to comment Share on other sites More sharing options...
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