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Original poster

Renting our house - do we need to tell mortgage lender?

30 replies

ducdo · 15/01/2010 19:00

Looking into renting out our house later this year, but do we HAVE to tell our mortgage lender? Surely if we keep on paying (which we will!) then we can stay on the same deal?

Our fixed deal comes up summer 2011 so will re-mortgage then and if still renting out our place, do we have to tell them them or can we just carry on 'pretending' we are occupying the house?

OP posts:
sowhatitsonlysnow · 15/01/2010 19:02

Technically yes, but I've never worked out how they would know IYSWIM

hana · 15/01/2010 19:03

yes you should tell them as that would change the terms of the mortgage. probably has something to do with different rates for 'buy to let' and what you have now

bibbitybobbityhat · 15/01/2010 19:05

Yes.

weegiemum · 15/01/2010 19:06

if you don't it can invalidate your insurance!

newkiwi · 15/01/2010 19:07

Yes, but you can apply for 'permission to let' which is normally granted if you intend to reoccupy the property. We were given this for two years and we're hoping that we'll be able to extend it.

I suspect you need different insurance too. But our was cheaper with tenants.

JeMeSouviens · 15/01/2010 19:12

They would know, when your tenants return post to sender instead of holding it for your FIL to pick up!

We emailed our mortgage people and told them and didn't hear back and thought it was all ok, took out tenant insurance and moved. However, when they had mail returned they figured we weren't living there, and now deny having received our original email.

It'll cost us an extra 200quid/mth when they switch us to the BTL mortgage, we have another 2yrs before we can remortgage without fees, so have to put up with it. And this was despite us intending to reoccupy.

Original poster
ducdo · 15/01/2010 19:55

But if we take out landlords insurance and keep our mail going to same address, just pay to get it re-directed, then surely that's OK ... ?

OP posts:
notcitrus · 15/01/2010 20:04

Landlord's building insurance usually requires that your mortgage lender consents to the property being let out, though.

Rebeccaj · 15/01/2010 22:51

Re-direction isn't infallible, as I am finding out! It also has a time limit - 2 years. What would you do then?

Also, as notcitrus says, you will probably invalidate your insurance if you don't tell them, which could get very expensive. So no, it's not a good idea.

Flibbertyjibbet · 15/01/2010 23:02

If you have a mortgage on your house then you aren't the owner - the building society and you own the parts that are mortgaged/paid off respectively.
Therefore as part owner they have a right to know who is living in it.
You need to tell them as, like others have said, it might invalidate any insurance, even if you take out landlords insurance.
It might be a condition of the insurance that your bank/mortgagor has consented to the property being rented out.
Its easy for the bank/building society to find out who lives somewhere, via the local council tax office.
Also you need to think about declaring it all for tax purposes other wise it can all come back and bite you in the bum.

Flowertop · 18/01/2010 17:27

Hi we rent out our property and have not disclosed to our mortgage company as was advised by the landlord insurance company that not everyone does this. I always declare the rental on my tax returns though.

nancydrewrocks · 18/01/2010 18:29

Yes you do have to - if you don't your insuranace will be invalidated. Bit of a bugger if your tenants burn your house down.

Not all companies make you change mortgage. Our Bank needed a cheque for 50quid to cover the 'admin' of changing their records.

BigGitDad · 18/01/2010 19:10

You should tell them and you should change your house insurance as well. Not telling the mortgage company will not invalidate the policy unless the insurance company insist that you tell the mortgage company.
FWIW you would normally stay on the same rate and everything but you might have to pay an admin fee as someone said earlier.
What mortgage company is it? Why don't you just call them and ask, don't give any details if you want.

Flowertop · 19/01/2010 09:52

When we rented out our house I changed the insurance to 'landlords' insurance and it was the guy on the phone who said 'most people don't even tell their mortgage company' so we didn't. I also have had my mail directed for over 2 years (not sure how have managed this. Off to check my insurance cover and thanks for raising query OPX

scaryteacher · 19/01/2010 10:07

Who is your lender? Some have no problem with keeping you on a residential mortgage, as long as the mortgage is paid, and you are honest up front. My lender just stipulated no local authority tenants, and we don't have to rent it out for 110% of the mortgage, as that is not achievable where the house is. However, dh is in the Forces and most lenders apart from Halifax, have no problem with HM Forces personnel renting their house out.

Flowertop · 19/01/2010 11:52

Have just checked with my insurance company who confirm that in our case not telling the Building society does not invalidate the insurance in any way. Not sure of other implications though....

careergirl · 21/01/2010 13:54

This is what my mortgage company says:-

If you are renting out a property on a residential mortgage, unless you have consent from the lender, you would be breaking the mortgage terms and conditions. It is also important to note that renting out a property in which you are supposed to be living may also invalidate your building insurance. (So you would have to tell your insurer the property is let)

Buy to let mortgage rates are now so competitive that if you intend to rent the property out there is no financial benefit in choosing a residential mortgage.

jmho · 21/01/2010 14:21

As others have said, you'll almost certainly be breach your mortgage conditions if you don't tell your lender.

You'll also find that if you're using a letting agency to advertise your property, most ask to see written confirmation from your lender that you have permission to let, before taking you on as a client.

We've rented out our house and our lender (Nationwide) has been really good about it - apart from taking months on end to process the request, so make sure you ask in plenty of time! Other people I know have had to pay a fee for their "permission to let" but I'm not aware of anyone being turned down.

charliebrownsmum · 21/01/2010 22:08

We've also rented ours out, for the past year and need to do so until july when our mortgage deal is up. I called our lender to ask about changing to Buy to let and they said they don't do buy to let mortgages.
We would have moved banks and paid the redemption fee but as my partner was made redundant and i was on maternity leave no-one would give us a mortgage, so we didn't tell them.
We have had the mail re-directed and our tenant is fab and forwards anything that slips through the net on to us. I also have landlords insurance and did not need to let the bank know.
I will switch to buy to let in July or we may just sell up!!

Loriycs · 19/02/2011 19:46

yes you have to tell your mortgage lender and your landlords insurance will stipulate this. make sure you get yourself landlord insurance from a reputable company too, and check carefully what the policy covers ie malicious damage etc
be aware that if you let to DSS tenants this may affect your insurance. Many insurance companies will not even insure you for DSS tenants and those that do chARGE MORE FOR IT.
i'D ADVISE YOU USE A LETTING AGENCY TOO!
This may cost you a little more but its worth it when things go wrong as they often do, or when there are disputes over return of deposits following damages etc.
Weve rented our house for 4 years now and had 3 tenants in that time, there have been no major problems but weve been thankful for the agents support when things have gone awry. Tenants are less likely to fight with an agent.
Good Luck.

thinkingaboutschools · 20/02/2011 19:55

Yes - it may be a breach of the terms of lending in which case they could call the mortgage - which would leave you with a big problem if you could not sell

Lizcat · 21/02/2011 16:45

As everyone has said it may breach the lending terms of your mortgage.

As far as insurance goes there are many good well priced landlord policies that do not exclude DSS tenantsd the majority of DSS tenants are excellent. Personally we find using a letting agent means you lose 10% of your rent for them to make a single phone call passing the problem on to you.
If you are doing it yourself you need to make sure you are using the tenancy deposit scheme.
Remember that if you are letting your home you need to declare the income on your tax return you will get tax relief on the interest portion of your mortgage and will be able to claim wear and tear allowance. There will, however, be a portion of the money that will be taxable though if one of you does not work they can use their tax free allowance againist this portion.

Ontheside · 23/02/2011 07:09

Interested to know if you rent your house out if you should be declaring this as income and be subject to tax?

Ontheside · 23/02/2011 07:10

So if you let your house out are you not subject to declaring the income and paying tax??

Gonzo33 · 24/02/2011 20:12

I rent my home (hubby forces) and I have to declare the income and complete a self assessment.