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BTL mortgage, is it necessary?

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    BTL mortgage, is it necessary?

    Imagine you want to move, and rent out your current house. You could afford just to keep it as a second home and keep paying the mortgage, but you don't see the sense in that so you think of renting it out.

    Do you still need to change the mortgage to a BTL mortgage? Given that you are not asking the lender to accept that it is covered by rental income: at worst the situation is equal to just keeping it as yours (which by definition is acceptable).

    #2
    A friend of mine is letting out his old house on a residential mortgage, and has simply kept quiet about it to his provider. Not something I would want to do.

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      #3
      Originally posted by Trev16v View Post
      A friend of mine is letting out his old house on a residential mortgage, and has simply kept quiet about it to his provider. Not something I would want to do.
      No, I wouldn't. When the time comes I will talk to them about it, but in the meantime I asked the question out of curiosity: ISTM that a special BTL mortgage would be needed if you were claiming that the rental income would cover at least part of the mortgage payments; but if you weren't counting on it at all, what's the problem?

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        #4
        Originally posted by expat View Post
        No, I wouldn't. When the time comes I will talk to them about it, but in the meantime I asked the question out of curiosity: ISTM that a special BTL mortgage would be needed if you were claiming that the rental income would cover at least part of the mortgage payments; but if you weren't counting on it at all, what's the problem?
        1) The mortgage does not have to be secured on the property being let in order to claim relief. Have a nose round the schedule A guides on HMRC.

        2) Your lender may or may not agree to letting. I have a let property with a residential mortgage through A+L. I pay them 75 a year for permission to let. They may or may not carry on allowing me to do this.

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          #5
          Originally posted by expat View Post
          No, I wouldn't. When the time comes I will talk to them about it, but in the meantime I asked the question out of curiosity: ISTM that a special BTL mortgage would be needed if you were claiming that the rental income would cover at least part of the mortgage payments; but if you weren't counting on it at all, what's the problem?
          You don't need to change to a BTL lender. Normally the terms of a personal mortgage dictate you must notify the lender if you rent the house out. The reason for this is it effectively becomes a commercial mortgage which are normally at slightly higher interest rates. Most lenders will either do nothing or increase your mortgage rate slightly if you notify them. However, given the current economic climate, they might sting you.

          Comment


            #6
            Originally posted by slackbloke View Post
            You don't need to change to a BTL lender. Normally the terms of a personal mortgage dictate you must notify the lender if you rent the house out. The reason for this is it effectively becomes a commercial mortgage which are normally at slightly higher interest rates. Most lenders will either do nothing or increase your mortgage rate slightly if you notify them. However, given the current economic climate, they might sting you.
            That would be a concern. My point is that (in my case) the reality behind it would not be converting my home into a business, which I can see would work on different calculations; but rather, a house that I could keep on without renting, but have no immediate plans to live in, would be rented out in the meantime: so in effect for the lender nothing would change.

            But they might sting me anyway, yes I can imagine that.
            Last edited by expat; 20 February 2009, 11:56.

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              #7
              Originally posted by Trev16v View Post
              A friend of mine is letting out his old house on a residential mortgage, and has simply kept quiet about it to his provider. Not something I would want to do.
              It's the building and contents insurance that are the problem. If you don't notify the lender that the property is now rented then it will invalidate your insurance in the event of a claim.

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                #8
                Originally posted by glashIFA@Paramount View Post
                It's the building and contents insurance that are the problem. If you don't notify the lender that the property is now rented then it will invalidate your insurance in the event of a claim.
                Surely that means notifying the insurer, not the lender?

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                  #9
                  Originally posted by glashIFA@Paramount View Post
                  It's the building and contents insurance that are the problem. If you don't notify the lender that the property is now rented then it will invalidate your insurance in the event of a claim.
                  It's got nothing to do with the lender. You can just get specialist rental property insurance.

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                    #10
                    Originally posted by expat View Post
                    Surely that means notifying the insurer, not the lender?
                    Not all insurers cover BTLs. You can't just tell your current insurer that the property is now rented and expect them to take it on.

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