tompat3463
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 posted on 7/11/11 at 09:02 PM |
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Mortgage and letting problems
Hi. Just putting this question out to u guys incase someone can offer some good advice.
My girlfriend has moved in with me in my owned house
The plan was for her to let her house out and the rent would cover her mortgage then she can help me with the payments and bills for my house
Problem is she has approached an agency regarding letting her house out. Everything was going to plan until she got. Letter on sat from the agency
saying she needs as letter from mortgage company confirming she can rent the house out.
Very well. She rang the lenders and the want to increase here mortgage to £450 pm for this. An extra £70 pm. Considering she was just going to be able
to rent the flat out for £385 PCM this is pretty bad in my eyes.
She has also thought about selling it but the price of the flat has depreciated from 75000 to about 65000 so obviously that's a neg equity of
£10000 plus selling fee and energy servers etc she will be around £15000 down. Which is also not good. !
So what's the options. Obviously renting the flat out and taking the hit is the easiest option but it's just a bit disheartening and an
insight to how bad the state of this country is in when it's costing you £15000 to sell your house or about £90 PCM for someone to live in your
home.
Any ideas will be appreciated. Cheers Alan
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designer
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| posted on 7/11/11 at 09:12 PM |
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Where are you.
That rent seems very low.
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tompat3463
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| posted on 7/11/11 at 09:19 PM |
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Northumberland. Bedlington station to be precise. I think the rent is fair on a good day we could probably get £400 PCM
Cheers Alan
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DixieTheKid
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| posted on 7/11/11 at 09:24 PM |
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I tried this once, i think the problem is now that the mortage company know that you are renting it out so they up the interest to a buy to rent
mortage or something. Get you hours free legal aid i would advise. Mortage companies/leaders are cars sales man in my eyes! I had to take them to
court to port my mortage, they settle out of court so really what was the efffing point?
Try to revert back to the old mortage arrangement, pivate rent and say your living there.
COS IT'S Worth IT
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franky
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| posted on 7/11/11 at 09:24 PM |
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you always get a worse rate on a buy to let. The extra over the rent isn't bad if you look long term is it?
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r1_pete
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| posted on 7/11/11 at 09:25 PM |
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Have a look into re mortgaging on a buy to let basis, there are specialist brokers in this field who will help.
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blakep82
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| posted on 7/11/11 at 09:34 PM |
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from working at RBS, as i did for 4 years, i left 2 years ago, so i assume things may have changed a little, buy to let (or a property being rented
out) interest rates are higher than normal residential rates, usually by about 2% or so.
with RBS, it was the case that if she had a residential rate on the mortgage, say fixed for 5 years on 5% or so, and the rate still had 4 years left
on it, and then asked to let it, RBS would give a consent to let letter out, and keep the interest rate on there til it runs out, then after that she
would be able to choose from staying on the buy to let standard variable, or choose a new fixed/tracker type rate.
i assume shes not on a particular rate just now? just on her banks sort of default variable rate?
if my assumptions are correct, then the bank is quite right to say the payments are to be higher. buy to let rates are always higher than residential
rates (except in some circumstances), and she's going to let it out.
what she can try and do, if she's feeling devious, is tell the bank she's staying put, get a new residential fixed rate rate she can still
move out and live with you, but pay a few months as a residential mortgage, then say 2 months time, phone them back, say its another change of plan,
and she wants to let it out again 
people used to set a new rate with the retention team, then phone straight through to me to ask for letting consent, you can't say no!
as i said, that was the way RBS and natwest did it sort of 2-6 years ago, and things may have changed since then... have her phone back up as a
general customer (not giving any account numbers! ) for a general advice. ask what happens to a fixed and variable rates if she asks for letting
consent, see if theres a way she can stay on a low rate and still get letting consent.
what rate is she on now?
________________________
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don't write OT on a new thread title, you're creating the topic, everything you write is very much ON topic!
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theduck
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| posted on 7/11/11 at 09:39 PM |
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As above nmortgage company are increasing rate due to swapping it to a buy to let product.
Legally you have to do this, in reality many landlords in your situation do not and many agents are accepting mortagge statements showing mortgage is
up to date and so repossession is not an issue as an alternative to the consent to let. This is because the consent to let is only really important to
the agent as a way of safeguarding a tenant from eviction due to repossession.
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JoelP
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| posted on 7/11/11 at 10:21 PM |
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id just find a tenant myself and not tell the mortgage company. Borrocks to them...
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skodaman
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| posted on 7/11/11 at 10:34 PM |
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Find your own tenant cos most agents charge 15% of the rent or a one off fee. If your not going to go on a buy to let mortgage which is a bit naughty
I suppose make sure you at least change the insurance policy.
Skodaman
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Bare
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| posted on 8/11/11 at 02:56 AM |
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Even WORSE than that In Canada IF a G'friend moves into YOUR Home then after a very few months she is entitled to 50% of it... Just for sleeping
with you for a very sh
ort time. Few Prostitutes would charge even close to that. And Likely are far better skilled at sex :-)
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cliftyhanger
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| posted on 8/11/11 at 08:17 AM |
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Back on point....
Letting is not as easy as many think. Yes, you can let direct, but if you are naive you can get turned over by tenants who search out such
landlords.
Be prepared to lose up to 6+ months rent plus legal fees.
Not being OTT on that either. Going via an agent, especially at first and seeing how it works is a safer way forward, still not infallible though.
Think you need to investigate your mortgage options. AND the buildings cover. Forget about contents insurance, that can be horribly expensive and
difficult to claim on.
Just my 2p worth..............
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Bluemoon
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| posted on 8/11/11 at 09:40 AM |
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quote:
Originally posted by cliftyhanger
Back on point....
Letting is not as easy as many think. Yes, you can let direct, but if you are naive you can get turned over by tenants who search out such
landlords.
Be prepared to lose up to 6+ months rent plus legal fees.
Not being OTT on that either. Going via an agent, especially at first and seeing how it works is a safer way forward, still not infallible though.
Think you need to investigate your mortgage options. AND the buildings cover. Forget about contents insurance, that can be horribly expensive and
difficult to claim on.
Just my 2p worth..............
Ditto in similar situation (but with nationwide) you need to be very careful or the 10K loss by selling now may not seem so bad, if you get a bad
tenant they can do a lot of damage too the property and expensive to remove ( (could be 10K if trying hard  ). Use a agent to start with.
Nationwide (and I guess other lenders) will let you let the house out on the standard mortgage, all be it with a higher rate (but with nationwide this
is still good in our case). You do need permission from the mortgage company; remember they own the house and not you, all you have is a loan...
In my situation we just cover our costs as a landlord, but the bonus is that the tenant is paying off our mortgage, so in the long run it's a no
brainier.. Being a landlord is not a simple as some might lead you to believe do your home work, and or find a good agent!
Dan
[Edited on 8/11/11 by Bluemoon]
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designer
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| posted on 8/11/11 at 09:44 AM |
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Always use and agent and be honest with all.
I am OK as I do this and can sleep at night.
Whereas, my mate, did it on the QT and got stung. Single girl signed his lease, then boyfriend moved in, tenant stopped paying then, when evicted
(expensive) they did loads of damage. Cost him 1000's.
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jossey
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| posted on 8/11/11 at 10:14 AM |
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if you have to subsidise your rent by £65 pcm in this climate its not too bad. given if you sell it you will lose around 10k renting it will cost you
£840 per year to rent out given the increase in mortgage payments. This means you could rent it out for 10 years and be no worse off than you would be
if you sell up.
House price projections from house builders gives a rough 3% rise over the next 3 years which is around 65kx3%=£19.5k which is around 6.5k per year
which is worth the extra adding into the mortgage.
If you can afford to cover the extra then its worth a punt. The other option is to rent it out to a family or friend member as a free let but with a
good will payment to you. One thing i would ensure you have is a good network of plumbers and sparkys etc.... if your letting company lets your tenent
down it will cost you alot and you will end up hugely out of pocket. also if you can check the prices they charge you for the services occasionally
you can ensure you get value for money.
Hope this helps you.
Other option is remortage your house to pay off her house if that is possible then it doesnt matter about the issue. if you can remortgage to cover
her settlement for less than £450 then happy happy.
Thanks
David Johnson
Building my tiger avon slowly but surely.
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daviep
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| posted on 8/11/11 at 10:50 AM |
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Based on your first post I would get shot of the house asap.
Is she actualy in negative equity, a £10k drop in value would only put you £10k negative if you started off with a 100% mortgage, losing £10k
isn't the same thing as being £10k negative equity.
Have you looked at which mortgage deals/rates are available to her?
Sorry if I'm teaching granny to suck eggs.
If she is in the position of now being in negative equity then things are very bad.
Is she is on a promotional mortgage rate at the moment?
If so when it expires she will be unable to access any of the competitive rates and will most likely have a very limited range of products available
all of which will have very high rates.
Any increase in interest rates is only going to make things worse and I think we will see interest rates begining to climb at the start of next year,
I wouldn't bet on house prices climbing either ore likely the opposite.
Regards
Doom and gloom Davie
“A truly great library contains something in it to offend everyone.”
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daviep
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| posted on 8/11/11 at 10:59 AM |
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quote:
Originally posted by jossey
House price projections from house builders gives a rough 3% rise over the next 3 years which is around 65kx3%=£19.5k which is around 6.5k per year
which is worth the extra adding into the mortgage.
That's actually 30%
3% would be £1950 over 3 years or £650 per year, not particularly profitable, infact you could stick it in the bank and get better than 3%
Davie
“A truly great library contains something in it to offend everyone.”
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