Do you have to tell mortgage provider you are letting your property?

[CocoaCloset]

Since we are relocating and unable to sell our property, we are considering letting it out. Is it imperative to inform your mortgage company? If we do, I think they will want to change our mortgage to buy to let and increase rate/fees etc which we can't afford. I thought if you continued paying on time it shouldn't be an issue, but am now concerned about insurance implications (for us and potential tenants) if we haven't come clean. Any advice?

We are in the process of doing this and like you I was concerned that the mortgage company might change our terms. In fact they've said that everything carries on as is, no fee to get permission etc. It's Nationwide btw. Our letting agent told me that her mortgage company wanted to charge her £1,500 a arrangement fee. So it depends on the company. I wouldn't risk it btw.

you usually have to tell them
you need to read your mortgage fine print

You don't just have to tell, they are co-owners and can turn you down for letting it (it will be in the terms and conditions if they can do this).

My friend 'informed' her mortgage company and they responded by saying they were then going to change the mortgage to a 'buytolet' mortgage and charged her £1200 which i think she is still complaining about.

It depends on the mortgage company what they agree to, but you must tell them.

We let our property to the buyers after their initial mortgage fell through (for technical reasons, not anything to do with htem- shared ownership property and only one lender dealt with that road becuase of soemanomally).

They did agree but only becuase buyer would be taking mortgage with them, otherwise they said it would have been a no.

Agree with others - yes you do and it seems really to vary according to mortgage company as to how they deal with it.

We are with HSBC and they just agreed to it without charging us anything or changing any of our mortgage terms. Fil is with Woolwich and he was charged about £300.

Seems to be the luck of the draw..

If I'm honest I have let a property in the past without contacting the mortgage company. Pretty sure I claimed on insurance too. Could be worth seeing if insurance would be void if you failed to inform mortgage co.

I had a residential mortgage with RBS when I let out my property.

Their policy was that I could stay on the residential mortgage, but had to pay £50 for "permission to let", which of course was way cheaper than having to change to a buy to let mortgage.

I did the same and mine was with Nationwide liking Airing and there was no problem. They just wanted to know and it has worked out well.

Seems like it depends who you are with - we have a Halifax mortgage. I suppose I didn't want to even query the issue with them incase they did come up with a high fee and knew of my plans! Just want rid of it to be honest, as renting it will still mean we are £500 down on the mortgage, but if we sell at the moment we are looking at £20k negative equity - it is a nightmare!

cocoa I'm in exactly the same position as you.

We relocated. Can't sell house as in neg eq so we are having to let without our mortgage company (Northern Rock) knowing. They initially said no to us when we enquired because the rent wouldn't cover the mortgage. We are £600 down every month but at least we're not bankrupt by having our house repossessed!

Anyway, so far so good. Have been renting it out for 2 years now. I was sick with nerves at first but am now quite relaxed about it all. If it ever did come out, I'd say that the tenants had just moved in and that they can leave at anytime (I think mortgage companies get worried because Tenants have rights, so if you are suddenly struggling to pay your mortgage, they wouldn't be able to repossess if there were tenants in there on a 12 month fixed contract say.......or they would, but it would all get very messy.

As long as they get their money every month it should be fine. There's no reason for them to get suspicious of anything.

I just can't wait to be rid of the place. Bloody recession making people resort to this cloak and daggery!!

Good luck

We were in the same position and told our bank we were letting out and the bank were fine.

The tenants however trashed my house and one did a moonlight flit owing me a lot of money. In the end we spent months and months paying rent and mortgage before selling at a very low price.

Thanks for the responses, am going to wait until after Christmas to do anything and hope a lottery win happens in the meantime!

Check your t and c's but normally you would. If you aren't getting another mortgage they may not change it.

Just to put the point of view of the tenant here...

We live in our own house now, but when renting between houses had some horrible problems because our landlords hadn't told their mortgage holder.

When the mortgage holder discovered we were renting the house, they wrote to us wanting us out of the house within a couple of weeks - all the usual tenant protections were apparently void in these particular circumstances. Their stance was that we should have checked that the landlords were legally OK to let the house.

We eventually got their agreement to stay until the end of the 6 month tenancy (another 2 months) but it caused us major problems, and we ended up buying a house we would not otherwise have chosen just to have somewhere permanent to go.

If I ever have to rent again (and DH will be VERY hard to persuade) we will get our solicitor to check that the landlord is actually entitled to rent the house out before we sign up.