It’s becoming more and more common for homeowners not able to sell their homes possibly due to negative to simply let (a.k.a. accidental landlords) without informing their mortgage lenders.
Many people are using this process to avoid paying higher monthly rates by having to switch to a buy to let mortgage, pay a higher interest rate and switching fees at lenders desecration.
Lenders are using details on the electoral role, letting agencies, online property websites and even social media websites such as facebook, twitter etc to track down offending property owners.
For property owners with a minimum of 20% equity have the option to switch to a different lender on a more competitive buy to let product, but those with limited or negative equity have no other option but to accept whatever the lender offers them upon disclosing letting of their property.
All lenders consider buy to let as more of a risky investment, due to void periods and possible non-paying tenants.
If a lender finds out you have let the property without their permission they can demand full payment of the remaining balance due to breach of mortgage terms. This can cause default and void home insurance policies!
Each lender has its own rules regarding requests for letting a once principle primary residence, known as consent to let. Some will simply charge an admin fee and allow you to remain on the same mortgage, others will add percentage points to the mortgage rates, while others will insist on switching to a buy to let mortgage product.
It’s always wise to check with your lender before attempting to let your property. We’d appreciate your thoughts on the subject…