Hi there

Like a lot of people we unfortunately just went to remortgage and due to downturn in market and reduction in property prices our original 95% mortgage is now a 100% mortgage.

This leaves us in a difficult position as we're moving to Scotland in 5 months time. We can't sell as won't be able to cover mortgage plus other costs so will have to rent out our property and rent in Scotland until market improves. Unfortunately in addition to this we won't achieve sufficient mortgage payments in rent so will have to make up the surplus ourselves.

We've not approached our lender yet (which even more unfortunately is Northern Rock) to ask permission to rent - but wondered if our situation would cause us problems for granting permision? if they refuse us permission does it 'really' matter if we do it anyway as long as 'on the books' it looks like we're living there?

Not sure if this is commonly done or exactly what would happen if we were 'found out' if you like? I can't see we've an alternative choice?! Or maybe i can't see the wood from the trees. All advice or tips would be greatly appreciated. Thanks in advance.

Hi shelle,

This is commonly known as a 'consent to let'. Very very common for people to do this. Various lenders have different views on this, some will do it provided it meets certain criteria, and some will do it no matter what the loan to value / rental will be. Im pretty sure that Northern rock are one of the flexible ones as they have a lot of customers in deep water thanks to their previous lending record.

I rent out a property myself as I have moved in with my partner. My lender isnt aware that I do it, as they have certain criterias which I do not meet with them to change it over, i.e. Loan to value and rental income. So I basically do it behind their back. If you keep up repayments and give them no reason to question you, then you should be fine. Worst case scenario, they could force you to re-mortgage in extreme circumstances.

As I said, Northern Rock tend to be more flexible. Give them a call and give them the hypothetical situation of 'travelling' and that you need to have a consent to let the property. I think they charge a small fee for this. Give them a rental figure of somewhere near what your mortgage payment is on interest only and they should be fine with this.

If they do not agree, you can potentially proceed with renting it out, but at your own risk. The chances of them finding out are tiny, and a lot of people rent out properties without consent!

Give them a call, then post back how you got on. Remember to use 'hypothetically'

Thanks for your quick reply.
Thats' great - will give them a call and see what they say. You've definitely put my mind at ease - this is all new territory to me!!
Thanks again - much appreciated. Will post how I go.
shelle

Hi, just to add to this - I am in exactly the same situ. and am also with N.Rock.

I have rented my property and will still need to contribute around another £300 p/m to make up my mortgage but the savings I will make on the new rented property I move into still make it a worthwhile exercise.

One word of caution though - you must inform your house insurance provider as they will need to amend the policy. Ultimately it will cost you slightly more to cover your house however you can generally take contents off the cover as you probably wont have your contents inside anymore so you may even be better off (bear in mind though that you will need contents cover at your new rental property).

If your current house insurance provider is N.Rock (mine isn't) then I suggest you change as obviously they will find out you are renting out!

In addition to previous comments you simply don't tell your mortgage provider your plans.

Hi shelle025.

I have just read your comments on this forum - and can't believe it as I am in exactly the same situation! I am wondering how you got on with Northern Rock, as we are also looking to move to Scotland and if we can't sell, we'll have to rent out our property too. I did contact them previously, and they said that normally they agree if the loan is 75% or less than property value, which ours won't be now since the recent price drops. I'm hoping they have relaxed their criteria. Hope to hear from you!

Hi mustangon

Thanks for your post. I spoke with Northern Rock but the guy I spoke with said he couldn't say the exact criteria (ie - they'd agree to renting if 75% loan to value) so i'm none the wiser! He said that to find out if we would be allowed we'd have to formally apply and wait to hear the result (which of course we don';t wan tto do incase they say no!). When I specifically asked re the criteria needed to be able to rent I was only told it was dependant on the achievable rent compared with mortgage payments. Sorry can't be more help! I was told however that if we were planning on renting for 1-2 years we'd have to pay a fee of £100 per year and for more than 3 years a one off fee of £250. Obviously thats to cover their very complicated and enormous paperwork that is invovled for them!?!?!?!?!

Good luck with your move to Scotland. Its all a bit depressing news at the moment whichever way you look at it but we're still going to relocate as planned! Hope you enjoy.

Hi shelle025

I have just had a conversation with the Northern Rock mortgage department. I have said we want to know in principle if we can rent out our property. I have been told that if we send in the letting application form, they will process it and then, if I don't want to go ahead straightaway,(which I don't as this is only hypothetical at the moment ), then I can cancel it and won't be charged the admin fee of £100 or more. So, I am doing that and sending a covering letter reiterating my conversation with them. They said that normally they do say 75% max, but I think that if the rent covers the mortgage then this is the main factor. I am hoping underwriters will look favourably, as surely many people who want to rent out their house are doing so as an alternative to selling and may well not own 75% of the property. I will let you know the outcome of this!

Yes, perhaps not the best time to move, but this property slump could last years I guess, so no point waiting!

Thanks for replying. Mustangon.