Thinking Of Letting - Advice Please

Hi.

I've found myself in a bit of a situation. If anyone could offer any advice I'd really appreciate it. Thanks.

I've recently taken out a mortgage with my (then) girlfriend. 6 weeks in and she's decided to split up with me and move out. I'm now left at the beginning of a long mortgage. I can probably just about make the payments myself, but it doesn't seem cost effective to spend £1000/ month plus bills on my living.

I'm thinking about letting the place and renting in a house share elsewhere. The mortgage and service charge on my place is just under £1000 on a repayment mortgage, and in rental I could expect to collect £900/month.

If I factor in paying a letting agent to look after things for me as well (12%, ~100/month) I'll prolly lose about £200/month on the flat, although even factoring this in I'll still be about £500/month better off than staying in the place on my own.

I'm on an excellent mortgage rate 4.5%, but my mortgage lender are only currenly offering a product on 5.99%. I'm worried about telling them I'm thinking of letting incase they want to change my product as this will work out expensive. It just says that I need to speak to them if I want to let but doesn't mention if there will be costs or not. I understand that it's important to tell my building insurance people, although they're with a subsidary of the lender as it happens. I don't know if they'd pass info to the lender.

What are the disadvantages of not telling my lender? What are the disadvantages of not telling my insurer? If I tell my insurer are they likely to notify the lender? What reasons could I give to the lender which may make them less likely to want to charge me? Would you recommend going through a managed service with a letting agent, or doing the letting myself? I was thinking of going with the agent for 6 months to get to know the process at least.

Also, although my girlfriend has said that as far as she's concerned the place is mine (I paid for everything except her share of the rent for two months), however, she's still on the deed and the mortgage. If I take her off properly it'll be about £500 in legal costs, plus £165 in taking her off the mortgage, plus having to refinance her half (at the new expensive rate). I think I'm going to leave her name on and get an agreement written up between us. Then I'll take her name off when I remortgage. Again, does anyone see any problems with this? Would I still have to pay the legal costs if I wait until I remortgage? What about if I wait until I move?

Thanks loads for any help.

W
Reply to
w.diggler
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Well if you don't do it now she'll let you pay it all off and then want half. Your choice.

You have some serious financial decisions to make.

If you can not afford to live there on your own consider a lodger. You can earn up to nearly £5k from that without it affecting your tax.

Can you get out of the mortgage? Sell it?

If you do dodgy stuff with your lender and insurance you risk being in big trouble if something bad happened.

Reply to
mogga

If the place is worth £900 rent, it can't be just a titchy one-bedroom place. So instead of moving aout and renting in a house-share, why not turn your own place into a house share, i.e. take in a lodger or two.

Taking in lodgers isn't "letting" in the sense which would need you to tell your lender and insurer.

One of the things about using letting agents is that they will want to be sure everything is above board, and will want to make sure your insurer *and your lender* know what's going on.

It sure will. My BTL lender is charging me 7.29% these days (but it doesn't worry me because the balance outstanding is very small and I'm only keeping the loan on because it's flexible and gives me the opportunity, should I require it, to reborrow £65k at the drop of a hat, no questions asked). Even if you don't switch to a BTL product, your rate is unlikely to stay at 4.5% long-term. At the moment, there's only one way rates are going, and that's up. Can you afford to keep up with rises?

There will. They will bump up the rate by at least a whole percent, and they will require the rental income to exceed the loan payments by a comfortable margin. As you say you could only get £900, so you're pretty well ruled out on that front. Also they like you to have typiclaly at least 20% equity.

You may need to switch insurer in any case becasue not all insurers take on lettings. You can get a letting agent to broker you an insurer even if you won't use them to manage the letting for you.

When they do eventually find out they will then bump up the rate. If you're unlucky they might charge the increased rate retrospectively from when you started letting (unlikely unless they can prove when you started). If you're really unluck they might kick you out, i.e. force you to repay the whole loan immediately, which would mean you'd have to sell. This is unlikely, though.

That if you make a claim it will be rejected.

Perhaps. I wouldn't risk it.

You could say you had to move out because your employer has sent you to work in Japan for 6 months.

It will be cheaper by far to just bone up on letting. There are books you can read. But I wouldn't advise letting. Have you considered just selling up?

Or you could just get a new girlfriend. :-)

What a mess.

You should take legal advice to see how effective this would be. I suspect it would not be a good deal for her. Although you can agree between yourselves that she rescinds any interest in the property in return for not paying any more towards it, the lender still has a possible claim against her (since you two have joint and several responsibility for the loan) if you should default on the loan. You could agree to indemnify against any such claims, but what if you were suddenly withough means? Then you would be unable to indemnify her and the lender *would* look to her to cough up.

Reply to
Ronald Raygun

I've found myself in a bit of a situation. If anyone could offer any advice I'd really appreciate it. Thanks.

I've recently taken out a mortgage with my (then) girlfriend. 6 weeks in and she's decided to split up with me and move out. I'm now left at the beginning of a long mortgage. I can probably just about make the payments myself, but it doesn't seem cost effective to spend 1000/ month plus bills on my living. ==================================I agree with the others, why not get a lodger in? Or is it just one bedroom? But definitely pay to get her off the deeds etc whatever you do,and do that asap.

Reply to
Tumbleweed

Thanks for the advice. I've considered the lodger option, and will go with that if I absolutely have to, although I'd rather move elsewhere as the flat has memories attached to it. Hopefully these will pass in time, but feels bad now.

I'm planning on moving it all properly when it's time to remortgage, so it would only have to be for a couple of years.

So, in summary, if I don't tell my lender, the worst that can happen is that they can ask for the extra rate retrospectively? How likely is this to happen so long as I keep up my repayments on time?

W
Reply to
w.diggler

So because of that you'll go and move somewhere you dont want to be? Since I'm presuming you chose the flat as it was somewhere you'd like to live? Redecorate so it looks different (instead of paying rent to someone, plus paying fees to a managing company, are you mad?).

No, the worst that can happen is that in 2 years your girlfriend reconsiders and decides to come after you for a share of the flat, now that there is some equity in it. Plus she'll have a hold over you, you won't be able to remortgage or do anything else without her say so, suppose she swans off around the world for a year or just drops out of sight or decides that well, she did help you choose it and without her you wouldnt have bought in the first place so she 'deserves' some of the equity, or she is pissed off by your hot new gf and decides to teach you a lesson?

I can just see the argument now 'but your honour, if the flat was the defendants only, why did he not remove her name from the deeds immediately'? Even if you win, care to guess what the legal fees will be?

Reply to
Tumbleweed

Not all lenders increase the interest rate for BTL. Some just charge a one off fee (several hundred pounds) and ask you to abide to a string of conditions.

Reply to
whitely525

Cool, thanks. If I call and ask them about it, will that alert them to what I'm doing if I decide not to declare it later? Does that make a difference?

Reply to
w.diggler

Heh, heh. Damned if you do, damned if you don't.

Reply to
Ronald Raygun

In message , snipped-for-privacy@gmail.com writes

Others all make good points but I would comment on this bit below..

What do you mean by 'her half'? She has no 'half' of the mortgage. You are both fully liable for all the debt. There will be no need to 'refinance her half', you just ask for her to be removed form the mortgage. The Lender will need to be satisfied that you can afford the whole mortgage yourself.

NO. Try getting her off the mortgage first. If your income is a bit short declare the lodging income that others have suggested you do.

At which time she may want a pay off before she will sign.

Yes.

Possibly a bit extra to cover getting her to sign the transfer.

Then she will likely want more dosh.

Reply to
John Boyle

Ahkay. Perhaps I misunderstood? I think the big problem was that the product I am on is no longer available. It was a special deal and now the only one they offer is 1.6% more than my current rate. They definitely said I'd have to refinance in my name. Hmmmm... perhaps this is worth checking? Can't I just tell them I can't afford the higher charge? What will they do if I say I can't afford it? Wouldn't they be better off collecting our agreed money than forcing me to sell up and losing 30 years of custom?

I know that you can never really tell how these things will work out, but we're going to get something drawn up between us, and it does seem as though we're going to stay friends.

Thanks again for your advice.

W
Reply to
w.diggler

Fact is your ex-girlfriend still has to pay her half , she is jointly responisible for the outstanding mortgage , so she better get use to paying for a house she's not living in and tough luck to her , show her no mercy , she has shown you none.

Reply to
Inch High Private EYE

In message , snipped-for-privacy@gmail.com writes

Not relavant. Releasing your ex other half does not effect the rate of ineterst.

Yes, what I thnk they mean is that you have to be able to justify the totel borrowing on your own account.

Yes. but it will get you nowhere.

T s**t I expect.

I dont know what you mean here. If you mean could you just keep paying, then thats fine. it will keep them happy. But you risk having to pay part of the eventual equity to your ex.

Good luck.

Reply to
John Boyle

In message , Inch High Private EYE writes

No. She still is responsible for all of it.

No. She is jointly and severally liable.

Agreed.

Reply to
John Boyle

More than that, surely. Unless she comes off the deeds, she can't come off the mortgage unless she consents to the mortgage. Or is it the case that an existing mortgagor is taken to have already consented so can be taken off (released from J&S liability) without further ado? This wouldn't work with a remortgage, though, would it?

Ungrateful cow. She's already had a whopping payout from being released from her obligations under the original mortgage. Isn't that enough? Don't answer that.

Reply to
Ronald Raygun

Doesn't matter. You don't want that product again, you already have it. All you need is to get her taken off the existing paperwork while you carry on on your own.

Reply to
Ronald Raygun

"hello, my friend has got a mortgage with you and doesnt want to call you himself and has asked me not to give his name, but can you answer a general question please....."

(Not from your own phone)

As others have said get her off the deeds/mortgage properly and quickly, even if she isnt a bitch her next BF might be a right B*st*** when he finds out about it.

Reply to
Miss L. Toe

Thanks. I did that. They said they think there won't be a charge but they don't know until I go speak to them in person. Apparently I need to speak to them in person and they may or may not agree to it. I still don't know if I should even be asking.

Okay, I've come around to this now. I'm happy to do it so long as I don't get the rate rise. I'm sure they said the rate would rise when I spoke to them, but I will check.

Thanks again. Further opinions welcome. When I was searching the ng archive I saw lots of people say that the practicalities of not telling your mortgage company didn't amount to much.

W.

Reply to
w.diggler

No, she hasn't said that, that was another poster.

She's agreed to get us something drawn up between us which says that should either of us want to initiate proceedings to get her off the deed then we will do so and share the cost.

Reply to
w.diggler

It is the change of ownership here that is the problem - you cant do that without telling the mortgage company. Change of use to buy-to-let on its own they would probably never find out about and wouldnt really care about too much as long as you keep up the payments.

P.S. - What happens if, 10 years into the mortgage, GF gets married and then dies ? Hubby (and/or kids) may come out of the woodwork and with a moderately good lawyer claim half the house you have been paying the mortgage on for 10 years.

Reply to
Miss L. Toe

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