Many people fail to realise that getting permission to let is important. You must inform your lender of your plans to rent out your home. By failing to do this many homeowners are opening up themselves to a whole host of problems further down the line. One of which is that they are likely to be properly insured. It’s really not worth taking the gamble when the property market is so unstable.
You will find reference to the idea of letting your property somewhere in your mortgage terms and conditions. It’s important you explain your reasons for renting and how long it’s likely to be for. Your lender will take a view based on your payment history, level of equity and what you tell them about your plans. It is likely that your lender will increase your mortgage rate or move you to a Buy To Let (BTL) product. If your lender suggests moving you to a BTL product it will reduce your flexibility going forward.
There will be fees attached to changing your mortage product.
If you are only planning to rent out your property for up to three years your lender probably won’t ask you to switch to a buy to let product. But we live in strange times. If you think your lender is being unreasonable you can try to make a complaint in writing but try to find out who exactly the complaint should be addressed to. If that fails you can always try writing to the Financial Ombudsman.
Having to move to a BTL product may not complicate matters too much if you plan to sell your property. But if you may move back in you’ll need to bear in mind you’ll have to switch back again. All this costs more money. You must also understand that a BTL product is interest only so you won’t be paying any of your mortgage off while the property is rented.
If it looks as though the BTL route is the only option you don’t have to stick with your current lender although that may be the cheapest option. Don’t switch before finding out more about this kind of mortgage.
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