Taylors4 Posted January 9, 2013 Share Posted January 9, 2013 If you are what are your experiences, what are the pitfalls of doing this? We have a very small mortgage and frankly it will be a right pain to go through obtaining another mortgage before we leave the UK. I don't want slating, just want to know who has done it and what your experience has been. In all probability I'll probably end up 'doing the right thing' and shell out a few more grand to get a new loan which will let me sub-let, even though we don't owe a great deal and own 85% of our property. We could probably pay it off with savings, but that would mean we come out with nothing. All help appreciated! Quote Link to comment Share on other sites More sharing options...
dmjg Posted January 9, 2013 Share Posted January 9, 2013 (edited) If you are what are your experiences, what are the pitfalls of doing this? We have a very small mortgage and frankly it will be a right pain to go through obtaining another mortgage before we leave the UK. I don't want slating, just want to know who has done it and what your experience has been. In all probability I'll probably end up 'doing the right thing' and shell out a few more grand to get a new loan which will let me sub-let, even though we don't owe a great deal and own 85% of our property. We could probably pay it off with savings, but that would mean we come out with nothing. All help appreciated! Some banks don't care. Others do. We are mortgaged through a finance company north of the border whom have a dead husband and living wife.... We had paid off half the mortgage in 3 years and had a load to value of 50%. Then the GFC hit. Never missed a payment though. They allow leave to rent for upto two years then they tell you to bugger off and find someone else. I managed to blag a third year, but have been told to find another lender as of next June. Now that's a fun thing to organise from 11,000 miles away! Wish I had of kept my mouth shut and not "done the right thing". Edited January 9, 2013 by dmjg Quote Link to comment Share on other sites More sharing options...
Rupert Posted January 9, 2013 Share Posted January 9, 2013 I haven't told mine, I have the correct insurance and the insurance company have not asked how the house is financed. Quote Link to comment Share on other sites More sharing options...
paisleylass Posted January 9, 2013 Share Posted January 9, 2013 The repercussions of going under the radar are serious if caught. We're potentially talking reposession. A mortgage broker will be able to help. We used John Charcol, who made the transition easy and relatively cheap for us! Quote Link to comment Share on other sites More sharing options...
Flathead Posted January 9, 2013 Share Posted January 9, 2013 If you are what are your experiences, what are the pitfalls of doing this? We have a very small mortgage and frankly it will be a right pain to go through obtaining another mortgage before we leave the UK. I don't want slating, just want to know who has done it and what your experience has been. In all probability I'll probably end up 'doing the right thing' and shell out a few more grand to get a new loan which will let me sub-let, even though we don't owe a great deal and own 85% of our property. We could probably pay it off with savings, but that would mean we come out with nothing. All help appreciated! Make sure you understand the terms of your house insurance. You really do not want to give the insurance company a loophole in case anything happens Quote Link to comment Share on other sites More sharing options...
tinkerbell13 Posted January 9, 2013 Share Posted January 9, 2013 We told our mortgage provider, sent forms to us and that was it. No Higher payments nothing. Very pleased to say the least Quote Link to comment Share on other sites More sharing options...
Incata Posted January 9, 2013 Share Posted January 9, 2013 My husband had his mortgage with Nationwide. When we originally rented our house out we contacted them and they allowed us to rent it out for 2 years (with no increase in the mortgage rate) and then said they would review it. at the end of that time. All the agencies we approached demanded that if we had a mortgage, that we showed them the letter from the mortgage company giving permission for it to be rented out. We paid off our mortgage a few months later so it wasn't an issue any more, but it might have been when the first lot of tenants we had in trashed the place and did £5.5k worth of damage. We only got £3.7k back and had we decided to claim the rest on our insurance, our insurance would have been invalidated if we had not told the mortgage company we were renting the house out, and had their permission to do so. It was a tiny sub-cause hidden away near the end of the contract, but I have no doubt whatsoever that had we made a claim and not told the mortgage company, that it would have been used as an excuse not to pay up. We rented it to the MOD (via their agents HCR) who told us they were putting a military family in it and then stuck a bunch of squaddies in (who used it like a barrack block). The tenants actions (disabling fire alarms, leaving live ammunition in the house, moving girlfriends in etc) invalidated our insurance anyway, so we could not claim the excess back, and we were over the limit to take them to the smalls claims court, and county court meant solicitors. Thus we were left heavily out of pocket. There are 2 morals in our experience: 1. Let your mortgage company know if you are renting as your insurance policy could be invalidated if you don't. 2. Never rent your house as a corporate let to HCR (who do all MOD rentals). Quote Link to comment Share on other sites More sharing options...
Taylors4 Posted January 10, 2013 Author Share Posted January 10, 2013 Wow thanks to all that have responded to this thread, so glad I asked now. You have certainly highlighted a few pointers for me! Its all food for thought. You don't always know what could happen until you do it and hearing a few of your responses is making me think very seriously. Thanks you all Quote Link to comment Share on other sites More sharing options...
cook Posted January 10, 2013 Share Posted January 10, 2013 We have to submit a 'consent to let' application form and no extra cost so its a no brainer for us Quote Link to comment Share on other sites More sharing options...
imo2oz Posted January 10, 2013 Share Posted January 10, 2013 This thread is very relevant to us. We have come to the end of the term for our morgage and it looks like we will be renting it out this Summer as we have had no luck selling it. As we are looking at taking out a new loan I am wondering which companies don't charge a higher rate if you suddenly inform them you wish to rent the property out. Things will be so tight I don't think we will afford a switch to a buy-to-let morgage, so can anyone recomend banks or building societies that don't penalise renting? I would be really grateful for positive experiences with banks?!? Imogen Quote Link to comment Share on other sites More sharing options...
McFisher Posted January 10, 2013 Share Posted January 10, 2013 We havent told our lender that we have rented it out. We have landlord insurance with Direct Line, and they didnt ask about mortgage etc neither. Generally your mortgage company will allow you to keep the rate you are on, but when that deal ends you will have to go on a Buy To Let product which are much more expensive. I have no idea what the lender would do if they found out, will cross that bridge when it comes to it. But how will they find out? As long as the payments are made on time every month they wont even question anything. We have been doing this for about 2 1/2 years now. Quote Link to comment Share on other sites More sharing options...
lara24 Posted January 10, 2013 Share Posted January 10, 2013 This thread is very relevant to us. We have come to the end of the term for our morgage and it looks like we will be renting it out this Summer as we have had no luck selling it. As we are looking at taking out a new loan I am wondering which companies don't charge a higher rate if you suddenly inform them you wish to rent the property out. Things will be so tight I don't think we will afford a switch to a buy-to-let morgage, so can anyone recomend banks or building societies that don't penalise renting? I would be really grateful for positive experiences with banks?!? Imogen My husband rented out his house for a couple of years when he had to move for work. He had his mortgage with HSBC and they were happy, no change of payments or type of mortgage. I would always say be honest........ Quote Link to comment Share on other sites More sharing options...
jaxcooper Posted January 10, 2013 Share Posted January 10, 2013 (edited) We are still in the UK but rented our house out and moved to a rental ourselves as we didnt want to sell in the current market. We told our mortgage company who simply charged us £250 for the priviledge of them making a note of it. They have chucked the fee onto the mortgage so no cash outlay. seeing as we have not bought another property there is no change to our mortgage at all. We are with Abbey. It has been over 2 years now too .. Edited January 10, 2013 by jaxcooper Quote Link to comment Share on other sites More sharing options...
northshorepom Posted January 10, 2013 Share Posted January 10, 2013 We havent told our lender that we have rented it out. We have landlord insurance with Direct Line, and they didnt ask about mortgage etc neither. Generally your mortgage company will allow you to keep the rate you are on, but when that deal ends you will have to go on a Buy To Let product which are much more expensive. I have no idea what the lender would do if they found out, will cross that bridge when it comes to it. But how will they find out? As long as the payments are made on time every month they wont even question anything. We have been doing this for about 2 1/2 years now. You've come to the nub of the issue Renting your house out without telling the lender is a risky thing to do, but it's one of those risks that is of a low likelihood but potentially high impact, so you have to make a judgement There are a number of risks associated with doing this. In summary they are: a) You will be in breach of your mortgage conditions. Your mortgage agreement is a legal contract and like all contract will contain remedies available to the injured party in the event of a breach. Generally in mortgages the lender reserves themselves the right to repossess and/or the whole debt becomes immediately due in cases where there is a fundamental breach of conditions. See here from the Cheshire BS, their standard Ts and Cs: http://www.thecheshire.co.uk/uploadedFiles/Resources/Documents/mortgage-terms-and-conditions.pdf Section 8.1.5 tells you you can't let it without permission, section 10 gives them the power to call in the loan or repossess if you default on broadly any of the conditions. I'm not saying they WILL respossess - you'll not the contract also gives them the power to do this if you miss one payment, and as well all know they rarely do that - but they CAN. It will always be a breach of any mortgage, and you can be sure they will be extremely unimpressed. But, as you say, keep paying on time and they're unlikely to find out (fwiw they usually find out by trying to contact you at your address, or if your tenant does something like apply for a mortgage with them and use your address as theirs, which tends to ring a few alarm bells.....) b) The insurance risk. I think this is a lesser risk but it will depend on your precise contract with the InsCo, and these vary. You obviously have to have landlord's insurance and the InsCo has to know you are letting the property. They might have some weasel words in there nullifying the insurance if you haven't got the permission of anyone else with a lien over the property (like a lender) but generally I doubt it - it doesn't materially affect the risk they have priced. You'll have to check. Obviously if they do have a get-out and your property is uninsured then that's a massive potential consequence. Again I think it's a low likelihood, high impact risk c) The contract you have with your tenant. If you don't have your lender's permission then the contract you have with your tenant has no basis in law and is therefore essentially unenforceable, not worth the paper it's written on. Which is fine if everything goes OK........again it's low likelihood, high impact. The fact the tenancy isn't a legal one is unlikely to arise unless it gets tested in court for any reason... Ultimately it's your call. You could rent out without permission for years and nothing untoward would happen, and that's the most likely scenario. Or you could get yourself in a world of pain if you're unlucky Quote Link to comment Share on other sites More sharing options...
Gareth 666 Posted January 10, 2013 Share Posted January 10, 2013 I'm really glad someone has started this thread, we are looking to rent our house out if we are able to move this year. We were also wondering the same things. Our mortgage is with Lloyds TSB, does anyone have experience of whether they bump the payments up or are they in the category of leave it alone as long as you let them know. Thanks Quote Link to comment Share on other sites More sharing options...
paisleylass Posted January 10, 2013 Share Posted January 10, 2013 First Direct is supposedly under HSBC, but is very strict on not allowing renting your house out. Anyone with FD who's thinking of letting their house should switch to one of the amenable lenders asap - with hindsight I wish we had to avoid the stress, although in the end switching lender from abroad wasn't too painful thanks to the fab broker! Quote Link to comment Share on other sites More sharing options...
Flathead Posted January 10, 2013 Share Posted January 10, 2013 (edited) Bear in mind that if you end up paying more interest on your loan,because of renting it out, that you can offset the interest against your Australian tax Edited January 10, 2013 by Flathead Quote Link to comment Share on other sites More sharing options...
Stovies Posted January 10, 2013 Share Posted January 10, 2013 (edited) I'm really glad someone has started this thread, we are looking to rent our house out if we are able to move this year. We were also wondering the same things. Our mortgage is with Lloyds TSB, does anyone have experience of whether they bump the payments up or are they in the category of leave it alone as long as you let them know. Thanks Our mortgage is with Lloyds TSB and we are renting our house in the UK out. While still in the UK, we made an appointment with the Mortgage Manager, told him our plans, he phoned the Mortgage people who gave us permission to rent out for a fee of 250 pounds which was then just added to our mortgage, so with a little bit of paperwork, we were all above board and legal. No hassles and no extra payments on our mortgage or anything like that. Edited January 10, 2013 by Stovies Quote Link to comment Share on other sites More sharing options...
RobertaSparrow Posted January 11, 2013 Share Posted January 11, 2013 (edited) Our mort is with a patriotic organisation north of the border who are nothing to do with the Queen. We contacted them before we left and they said we had to change to a letting mortgage which would quadruple our mortgage payments. This would leave us 750 pounds short of our mortgage every month after the tenants had paid the rent. After explaining this to them they basically said 'tough'. We now have a tenant in place and have Landlord's insurance. Our mortgage is being paid, as is our insurance and emergency callout insurance and we have money left over for repairs, and that's it. I think it's unlikely that the mortgage company would repossess a house on which the mortgage payments are being met in this climate. After all, there's no-one to sell it to and it would remain in their possession and then get sold for next to nothing and they'd make an even bigger loss. In the olden days (pre crunch) there was a good likelihood of a house having lots of equity and so it would be worth repossessing to sell on. But there's nowt queer as the finance industry so who knows. If they want to repossess our house they should come get the keys - it'd be a relief! Edited January 11, 2013 by RobertaSparrow Quote Link to comment Share on other sites More sharing options...
bwatt99 Posted January 11, 2013 Share Posted January 11, 2013 Has anyone moved to oz,rented there home and not told bank with halifax?I have about 6 yrs left with my mortgage and never missed a payment,i did not even know you was supposed to tell them you might be renting,this might be an option for me renting if it does not sell,one of you guys said that for a fee of £250 you paid bank and they said ok to rent etc,if i knew this was the case with halifax i might do this but if they was gonna boost up the monthly payment and punish me with extra charges by telling them and being honest they why should i,whats the worst or what happens if you dont,i see some of you have said nothing can they find out,whats it all mean? Quote Link to comment Share on other sites More sharing options...
mxh Posted January 11, 2013 Share Posted January 11, 2013 can they find out? I'm sure it will come to their attention without too much effort on their part - what about the letters/statements they send you that get returned because you no longer live there? Or if you have a query and have to ring them from abroad etc My mortgage is with the Woolwich - I had to fill out a "request to rent" form and pay a £25 fee - that got me the OK for 2 years. When the 2 years was up, I sent them another form and another £25. Not sure how long they'll allow me to continue, but I'm happier with this arrangement rather than not telling them and having that "what if" in the back of my mind. Quote Link to comment Share on other sites More sharing options...
RobertaSparrow Posted January 11, 2013 Share Posted January 11, 2013 Royal Mail will redirect mail for 2 years and usually ASTs have a clause which says the tenant should pass on any of the landlord's post to the landlord (ours does anyway). More importantly, anyone considering not telling the mortgage company should beware that the mortgage company could impose a punishment of x% interest on your monthly payments if they find out. So, as in our case, they would move us to a 4% fixed rate mortgage for buy-to-lets from the 0.89% base rate tracker that we're currently on, and then add another 2% on the top. Quote Link to comment Share on other sites More sharing options...
McFisher Posted January 11, 2013 Share Posted January 11, 2013 Our tenant keeps hold of our mail for us...ok if you trust your tenant i suppose x Quote Link to comment Share on other sites More sharing options...
Taylors4 Posted January 11, 2013 Author Share Posted January 11, 2013 We are with First Direct on an offset loan. When I initially asked them and told them we were emigrating they said in no uncertain terms NO WAY - this was about 6 months ago. Now having thought about it, I changed my approach so yesterday I rang and explained we were going abroad for work purposes, probably for a year or so and we would be temporary residents of Australia (as we are applying for a 489 temporary visa, although of course we are hoping after 2 years to apply for PR). She said normally the answer was no, but as its on a case by case basis, as we had not missed any payments etc, THEY WOULD ALLOW US TO DO IT FOR 2 YEARS!! Hurrah! The only stipulation they gave was that we couldn't have access to the re-drawer facility. The rate would remain the same etc, So I am feeling much better about it now. She did say after the 2 years it would be reviewed. We are thinking they will then want all their money back, which we will have to address, as if we are still in Oz, it will presumably be difficult to get a mortgage again in the UK as we would not be residents. But, if we are earning ok money, we hopefully will be able to send money back to the UK and gain a bit on the exchange rate. Well that's the plan for us I think! Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted January 11, 2013 Share Posted January 11, 2013 If you are what are your experiences, what are the pitfalls of doing this? We have a very small mortgage and frankly it will be a right pain to go through obtaining another mortgage before we leave the UK. I don't want slating, just want to know who has done it and what your experience has been. In all probability I'll probably end up 'doing the right thing' and shell out a few more grand to get a new loan which will let me sub-let, even though we don't owe a great deal and own 85% of our property. We could probably pay it off with savings, but that would mean we come out with nothing. All help appreciated! Or informing the Australian Taxation Office. A dangerous thing to do these days with the close links with Inland Revenue not to say potentially very costly. Quote Link to comment Share on other sites More sharing options...
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