Reply With QuoteIf your new mortgage isn't with Halifax, couldn't you just not tell them?
Hoping someone on here will have been in this position, and may be able to offer some advice...
In a few months, we'll be moving into our new house, and plan to let out our current house.
Problem is, the value has dropped from our purchase price, and as such the LTV will be about 100%
The mortgage is with Halifax, so how will they approach this?
We don't qualify for their buy to let mortgages, due to the high LTV, so will they let us continue on paying the standard variable rate as we are now?
If your new mortgage isn't with Halifax, couldn't you just not tell them?
I'd thought of that lol, but would there be insurance implications if the damned thing burned down etc?Originally Posted by TaketheCannoli
Don't do it! If you let the property without permission to let from your mortgage provider and the worst happens, then you'll be up the creek a) because the mortgage provider who probably own the majority of the house weren't informed and will want their money back, and b) even if you take out commercial landlord's insurance the policy will be null and void without the lender's permission to let out in the first place.
We moved out of our house a couple of years ago and mortgage is with HSBC. Because we moved for work reasons into a rented flat, they let us have permission to let for x2 consecutive 12 month periods. We then took proper landlord's buildings cover in case anything happened to the property and we needed cover up the rebuild cost etc.
I suspected this John, thanks.
Speak to a Mortage Advisor, lenders are getting fussy but some will listen. I have had various hurdles to overcome (getting a Buy To Let without having a residential mortage, getting a residential while in process of switching to BTL, demonstrating that due to mileage payments my car finance should no lower affordability etc etc), having a good advisor who is prepared to speak to lenders rather than just crunching numbers is essential, mine has produced results than others said were not possible.
I've just completed the same kind of with the nationwide. A simple form was completed in about five minutes and a admin fee of £30 was paid. I've stayed on the same deal as I was on before. I was told that so long as I wasn't renting to students then I wouldn't be turned down. The only thing is going to happen is the standard variable rate is going to go up by 1.5% in six months time.
I would advise that you do tell your provided because if you don't and something happens then your committing mortgage fraud and they are within their right to for close on the loan.
The nationwide have been brilliant with me.
You can't take knickers off a bare arse ;-)
That's as maybe. I was also told that they'll back date the higher interest rate and charge that to you as well.
If your using a letting agent they'll also ask you if you've notified your mortgage adviser. It comes down to how honest you want to be, a bit like telling the tax man about the extra income.
Hi, if I understand your situation I did a similar thing and have a mortgage with the Halifax. I moved out of my flat to my girlfriends house and have let the flat. I wasn't offered a buy to let as you are a customer already - what you get is a 'consent to lease' mine was pretty much at the same rate rather surprisingly. This is however a short time solution for about 18 months for me. After the consent to lease expires I just move onto a standard variable rate (which actually isn't that bad at the moment).
They didn't really want to offer any other products so think I will have to leave Halifax and buy a commercial (BTL) product from another lender. I have to say Halifax have been very good and quite helpful generally although all the consent to lease applications don't seem to be agreed in the branch, i could only do through a telephone conversation. Good luck - quite welcome to PM if you have other questions!
Depends on your risk profile.....I wouldn't tell the mortgage company, or I might say it was a temporary relocation due to work contract etc, the lender might accept it which could buy you an extra year. You might have a bit of equity by then or there might be some better deals about.
A few years ago banks wouldn't have worried but now they seem to be over cautious... example above not lending to students is typical. This is one of the most profitable rental markets but the bank turns their back and would rather you rented to a family, make zero profit, much more chance of missed rent and would be nigh on impossible to evict.
If they pull the rug and say no, what are your options? A 100% btl would be impossible right now.
You haven't got long to get it sorted.....
I've done the same with Santander but for an annual £90 fee. Santander have messed me around though on other matters so just applied to Coventry Building Society for a BTL mortgage and thankfully my bonus will cover the extra I need to put in to bring the mortgage to 75% LTV. All approved in principle just awaiting the surveyor to visit who hopefully agrees with the figure I've suggested.
This is more common than you may think and all you need to do is contact your lender and ask for permission to let. They may not honour the original mortgage deal and will assess each application on its own merits but you do not have to change to BTL product because you are letting out your premises so long as your current lender is approached.
As has been said you need to apply for ‘consent to let’ from Halifax. Different banks have different criteria for accepting or not, if they say no you're stuck and will have no option at 100% LTV other than selling up. I know with nationwide it’s particularly easy with just a quick form, £30 fee and away you go, they don’t even care what the rent will be, they then add 1.5% to your rate after a while (was 3 yrs for me, but is only 6 months now). Other lenders are much more picky, don’t know the specifics of Halifax, but quite a common criteria is that the rent needs to cover the mortgage interest +25% before they’ll consider it, so for example if monthly mortgage interest is £1000, rent will need to be at least £1250, which I guess you’ll struggle with at 100%LTV? They may also load your interest rate immediately and could charge as high as 6%. Ring them and ask.
Also you need to consider all the other things that being a landlord entails. You need a gas safety cert doing before anyone moves in and then every year. Landlord specific buildings insurance. Register with hmrc for self assessment so you can pay tax on the rental income (minus allowable expenses including your mortgage interest).
Consider that once you deduct agents fees, maintenance/repairs, insurance, tax etc etc, you might not have anywhere near as much of the rent left as you thought, will it still cover the mortgage and if not can you afford to top it up out of your own pocket every month. Could you afford to pay the mortgage if the place is empty for x months or you have a non paying tenant that takes months to evict?
Brighty
Don't tell them.
Consequences of letting without their consent is that you will be in breach of your mortgage conditions, which if they found out could result in them immediately wanting their money back or taking you to court.
Also that the tenancy agreement may be unenforcable as you will not have complied with it's conditions, which could lead to fun trying to evict someone.
On top of that your buildings insurance will be null and void.
Brighty
In my case, they could have their money immediately.
The tenancy agreement makes no mention of mortgages.
My building insurance makes no mention of mortgages either.
I'm sure there are risks, but there are risks in most things. You calculate them and you manage them, which is what the OP needs to do in this situation.
Out of interest, what does your mortgage agreement say?
Pretty sure there'll be something in there about you being the occupant and not letting or sub-letting any part out without their prior permission.
I'm sure you're absolutely correct.
If that's the case and you're letting without permission, the mortgage company could make life exceedingly difficult for you if either a) they discover you are letting without permission or b) some unfortunate accident results in damage to the property which leads to an insurance claim.
Much better to approach them and get them on side if at all possible.
My getting them on side will involve me shovelling a lot more of my money their way than I do now. Risk and reward.
My Mrs got a mortgage without a deposit and then we moved away, no money knocking around to pay a deposit on a buy to let mortgage so they have not been told.
It took a bit of effort to sort the mortgage at the time and now the house is worth less and is generally a pain in the arse.
I've told her about this thread.
Are they all going to want a deposit if the mortgage is changed?
Last edited by minkle; 27th February 2014 at 20:20.
Pretty much and the minimum equity for BTL is 25% (that I can find)
Ha! Shes stuffed then.
Thanks all, a trip to the Halifax tomorrow I think.
Much talk about BTL mortgages here.
The OP (and Mrs minkle) didn't BTL - are cases like theirs treated just the same?
The banks tend to be a lot more sympathetic towards 'accidental' landlords like the OP and Mrs Minkle and will be far more inclined to try and work something out or give you a bit of time (6 months). Also, if the bank has a 100% mortgage, and the property is worth less than the balance of the mortgage its in their interests to work something out with you......if they squeeze you too hard they might just end up with the keys back, and they wouldnt want that with negative equity!
Good luck.
I didn't live in mine for a number of years while it was tenanted, I just didn't tell the lender and the mortgage was paid so they didn't care.
The issue only arose when I wanted to change lender and they ask for proof that you are in residence, I couldn't. The lender in my opinion (I'm a surveyor) undervalued the property as they look at an online database from Halifax. As such I didn't have sufficient equity in the property to change to a BTL so am currently applying to another lender with a view to adding a lump of cash to bring me over the 25% equity threshold.
My question was asking whether you even need to get a BTL as you haven't bought to let (and are an accidental landlord as P. Fox aptly described it).
If the OP is moving and going to rent his existing property then doesn't he need a let to buy, not buy to let?
I understand so, I bought to live there but after a few years moved out. If you have a tenant in there and want to make changes to the mortgage, regardless of whether you are accidental or not it will probably need more than 25% equity or you're stuck with that lender
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