I want to rent out my house, Does any one know....

[embo]

Do i need to change my mortgage to do this?

or can i just go for it?

Many Thanks

[MrShed]

In theory, you MUST inform your mortgage lender of your intentions. They may then force you to take out another mortgage, or they may just ok it. However, if you go ahead and do it without informing them, you would be in breach of your terms with the lender, and you COULD have repossession instigated against you. Admittedly, this is unlikely.

[danler]

Hi, as you have mentioned about changing you mortgage. A BUY TO LET mortgage is round about 6 to 6.5 percent, much more than a residential mortgage and if there's not enough rental profit they won't usually give you a BUY TO LET mortgage. I started off keeping my mortgage as a residential until I wanted to raise more money on my propery, to buy another house. I now have 4 houses on rent and each house has paid the deposit for the other, and now all 4 are on BUY TO LET. 2 years ago I had one house - the house I lived in. I now have 5, 4 of them are rented out. I'm now on the search for another...

Regards
Danler

[LondonPam]

In most cases you also have to notify your insurance company. I haven't heard of any mortgage companies forcing you to change your mortgage but I do know that some insist on "vetting" any tenants and will only allow you to let to those they agree upon.

[MrShed]

More often than not, they WILL insist you change mortgage. If they are really bad, this may also mean you have to pay a redemption penalty(which could be in the thousands). If the property is leasehold, you would also have to inform the freeholder, and possibly pay them extra as well.

[meagain]

Originally Posted by MrShed

If they are really bad, this may also mean you have to pay a redemption penalty(which could be in the thousands).

You will be able to get this back (the level of the fees put them well into "unlawful" territory), but you will need to pay it out in the first place.

[Nightmare4banks]

embo in reply to you post and in my opinion - maybe a few things have been mentioned by other posters:

1.If you current mortgage is for "owner occupier" you should change the product because if you did not it would be breach of contract.You would only have a problem if the property was tenanted and you got into difficulties in paying the mortgage.I would still change the product because you can rent out the property with peace of mind regarding this matter.

2.Charging the product could possibly incur some admin fees - refer to your mortgage booklet with the tariffs of charges.This could depend on how long you have had the property and your previous payment history.Also,the mortgage company may want to charge you more interest - this is something else to bear in mind.

3.Regarding the insurance,you should again have it to cover tenants with the building insurance cover.You could get other insurances i.e.rent guarantee etc but this would be done subject to your tenants to be be being properly vetted prior to giving him/her/them a tenancy.Another good type of insurance to have is legal expense insurance,you may already have this with your existing building insurance.


Anyway,I hope this helps.

[MrShed]

As a point of note, most decent landlords agree that rent guarantee insurance is a waste of money.

[purplefile]

Some lenders will simply charge an extra admin fee and raise your interest rate 1/4 or 1/2 % and insist on you providing landlords insurance with their interest noted on the policy.
It depends on whether you are with a lender who does BTL's. They may also ask for proof of rental income in the form of a survey from a qualified surveyors or property letting company letter showing that the expected rental income is achievable and meets their BTL criteria. As a general guide the rent needs to cover your mortgage payment at your lenders standard variable rate + 25%.
If you are buying another property your new lender will need confirmation of the above details concerning rental income and may also request that your 1st lender is aware that the property is let with their knowledge.
If you are letting & purchasing (and have no Early Repayment Charge) it will propably be easier all round to change to a Buy To Let mortgage.
Long gone are the days when the BTL rates were a lot higher than residential mortgages and there are lots of competitive rates out there. If the rental income does not cover the mortgage quite a few lenders have income rental products which allow for this if you have spare income.
All credit ratings are now catered for also.
Regardless of what way you are doing this do get proper Landlords insurance.