Change of plans while on consent to let on fixed rate

[BrightonBeige]

We had to move from our old place and rent out our home about a year ago, as my husband's work location changed and the commute wasn't sustainable. We got a consent to let from our lender as the plan was to move back in a couple of years once his current contract came up for renewal. Along the way, about 9 months ago, we switched to a fixed rate mortgage with the same lender, while still on consent to let. We're renting in our new town. Our house in the old place gets a rent that easily covers the mortgage payment. Our original consent to let is valid for about 15 months from now (until Valentine's Day 2023 :)).

Now, we're considering buying a house in our new area as our rent is pretty high and we'd rather be using that kind of money to build equity in a property. We will probably still move back to our old place in a couple of years (and rent out the house we're considering buying here).

If we were to buy this second house while on consent to let, would lenders see that as a 'permanent' move?

If yes, what would happen to our consent at that point? Would we need to pay back the CTL mortgage and get stung by early repayment charges (as we're on a fixed rate)?

What are the conditions of the consent? Do they say anything about it being conditional on not owning a second property?

I think your bigger problem will be that you only have consent to let on a residential mortgage. It will be very difficult for you to qualify for a second residential mortgage on another property. You’d need to convert the one on the property you aren’t living in to BTL formally. And if you’re buying a second property, you’ll have to pay SDLT on that basis and potentially capital gains tax in the future.

@ComtesseDeSpair

What are the conditions of the consent? Do they say anything about it being conditional on not owning a second property?

I think your bigger problem will be that you only have consent to let on a residential mortgage. It will be very difficult for you to qualify for a second residential mortgage on another property. You’d need to convert the one on the property you aren’t living in to BTL formally. And if you’re buying a second property, you’ll have to pay SDLT on that basis and potentially capital gains tax in the future.

Re: conditions of the consent, there is no mention of not owning a second property. All they say is the property should be let out on an AST, shouldn't be let as a HMO, renting should be informed to the buildings insurance etc.

Under these circumstances, would buying a second home lead to lender potentially withdraw consent?

Hadn't thought of the potential issue with a second residential mortgage.. good call.

They wouldn’t automatically withdraw consent, no. But at the end of the consent period, they’d require you to either move back into the property and comply with the terms of your residential mortgage, or remortgage to a BTL mortgage - which you may not qualify for.

15 months isn’t very long at all, so if you’re thinking about medium- to long term plans then I think you need to speak to a mortgage broker about options and whether they are viable.

@ComtesseDeSpair

They wouldn’t automatically withdraw consent, no. But at the end of the consent period, they’d require you to either move back into the property and comply with the terms of your residential mortgage, or remortgage to a BTL mortgage - which you may not qualify for.

15 months isn’t very long at all, so if you’re thinking about medium- to long term plans then I think you need to speak to a mortgage broker about options and whether they are viable.

Re: qualifying for a BTL, do you mean in terms of our income, LTV etc at that point when we get to the end of CTL?

Yes. You would need to meet the lender’s criteria for the product, which is why it’s best to explore things properly with a mortgage advisor ahead of making any firm plans.

@ComtesseDeSpair

Yes. You would need to meet the lender’s criteria for the product, which is why it’s best to explore things properly with a mortgage advisor ahead of making any firm plans.

Agree @ComtesseDeSpair. We will get an advisor involved, but was just wondering if it's even worth pursuing.

Good to know at least it doesn't appear to be a case of an automatic withdrawal of consent