Many banks and building societies will consent to let on a short-term basis, typically two years, said Ray Boulger, of mortgage broker John Charcol. Permission in writing is the only way to let out a property while staying on a residential mortgage. If your stint as a landlord is likely to be a short one, asking your lender for consent to let could be the best option. There are two main ways to go about this, depending on the length of time you intend to let. The bottom line is that borrowers should always alert their mortgage lender if they intend to rent out a property. However, banks and building societies have developed increasingly sophisticated methods of catching out armchair buy-to-let investors. It may be tempting to take the view that a lender is unlikely to discover you are letting a residential property. It will also spell disaster for a borrower’s credit file and make them a very unfavourable borrower for any future mortgages. In reality the chances of being prosecuted for mortgage fraud of this sort are small, but lenders are not willing to turn a blind eye and the repercussions could be financially ruinous.Ī bank or building society is entitled to demand instant repayment of the entire mortgage if it finds a borrower is letting a property without permission – and this does happen, with the added sting of early repayment charges on top. This constitutes mortgage fraud, which is a criminal offence. Failing to notify your bank about letting a property out may seem like a small inaccuracy, but lying to a lender for financial gain is a breach of contract. Residential mortgage offers include a clause stating that the property cannot be let out without the lender’s explicit permission – failing to inform the bank before letting a property would breach the terms and conditions of the loan. Homeowners upsizing or moving in with a partner also frequently choose to retain their original flat or house and try their hand at being a landlord.īut those choosing to rent out their home for the first time risk the wrath of their mortgage lender if they neglect important housekeeping. The number of accidental landlords is on the rise as vendors bide their time and delay selling until the property market improves, renting out their home and moving elsewhere in the meantime.
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