Mortgagee's consent to sub-let

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    Mortgagee's consent to sub-let

    Bear with me please...............!

    Last year my in laws offered us a great deal to buy their house. With me being in the Forces we thought that if we had to relocate then we would just let the property; so we contacted A & L for a mortgage.

    I informed them of my concerns and was assured that lots of Forces people let and it would be no trouble obtaining the consent to let. So we went ahead.

    Fast forward to nearer the completition date and i have been informed that my posting to the new house area has not been successful and i will be remaining where i am for the time being. I immediately contact A & L and as we have already spent money doing the house up, fees ec i tried to apply for the consent to let so i can immediately start the process of obtaining an agent, get the house advertised etc.

    However, i was informed that i can only apply for the consent to let once the completition has took place; why? I can still stop the sale now if they refuse the let and save everyone a lot of trouble.

    What is the criteria for a consent to let? Any tips on assuring the best chance for being successul in the application?

    Why can't they say yes or no now???

    I am very worried that having spent all this money the property may be sat empty for many years to come (i am tied to a 5 year fixed rate mortgage).

    If all goes well, great, if not, then there is the real possibility of me facing financial ruin!!

    #2
    I was in a similar position to you when I remortgaged my flat 3 years ago. However I am not in the forces - I worked for an IT company and near to completion I had accepted a 2 year placement in Australia.

    I informed Nationwide straight away and they said that although it would be no problem granting permission to let the property, I had to wait until completion to apply as they would not be able to give an answer before then. Simple reason being was that I was applying for a residential mortgage not a buy-to-let. I guess this is normal for all mortgage lenders.

    I applied for permission 1 day after completion and there was no problem getting it as my reason was employment transfer abroad (I didn't even need to provide a letter from my employer but A&L might ask for this so best to have this ready). Three years later I am still letting as we are now working in the States. I have to re-apply for permission every year but they don't ask for any written evidence.

    In my opinion I don't think you will have any problems with this especially as you are in the forces and don't always have a say over you can working - stronger case.
    Last edited by Sam; 02-01-2006, 14:39 PM. Reason: typo

    Comment


      #3
      Oh dear, what's this about a letter? As in my job things change at very short notice. I was informed that a few positions would be disestablished, as i had been there quite some time, i would more than likely be moving, hence the house buy in a different area.

      However, i have now been informed i will be remaining for the time being. So therefore nothing official was ever made. I suppose i could ask my boss to pen such a letter, but i can't see them being under any obigation to do so as i made my decision based on a "maybe".

      Bugger...............

      Comment


        #4
        Hi

        I understand how annoying and worrying it can be but here are a few things you have to consider.
        1) No other mortgage lender will probably be able to give you consent to until after completion.
        2) The fact that they have assured you that it won't be a problem should give you peace of mind. At the end of the day they know that if they give you the mortage under false pretense when you told them your situation and then you can't afford to pay back then you will lose your home. A reputable lender (which A&L is) would never put you in that position. Remember they are regulated very strictly by the FSA.
        3) No mortage lender would allow a property to be vacant for 5 years as there would be problems with squatters and insurance. Remember they own more of your house then you do and would not put it at any risk either. Therfore if you can't physically be there then they have to let you let. They will ask for it to be through an agent and insist that you have an ast agreement but this is normal and I guess something that you would do anyway (that's what nationwide asked from me).
        4) The worst they could do is put the mortage percent up a bit but again in my opinion this isn't common if they reason for letting is employment.

        To give you peace of mind maybe talk to them again and ask for reassurance. Make a note of the person you spoke to and the date.

        I have had lots of friends buy places and then move for work and they have never had any problems with any lender.

        Comment


          #5
          the end of the day they know that if they give you the mortage under false pretense when you told them your situation and then you can't afford to pay back then you will lose your home.
          Yes, that makes sense, i suppose it helps when your 'outside the box' to see anothers problems.

          As for Mr Shed, we complete on 11 Jan, so although we could back out, we have come to far and paid too much to start again (also we are buying off our in laws and they need the sale to get their new home).

          Thanks for the advice and tips.

          Comment


            #6
            Unauthorised sub-letting (residential mortgage only)

            Just wondering how many landlords are letting their property without a buy to let mortgage and without permission from the lender. Is this risky?

            Thanks,
            George

            Comment


              #7
              Risky letting

              It is not the lender you need to worry about - it's the insurance.

              Insure privately with a company that is aware that you "may let in the future" and you will be covered.

              Provided you keep paying the mortgage everyone is happy.

              Comment


                #8
                letting

                Does that mean you wouldn't bother notifying the lender?

                As the property is leasehold it will probably already have buildings insurance.

                George

                Comment


                  #9
                  Originally posted by Owen Money
                  It is not the lender you need to worry about - it's the insurance.

                  Insure privately with a company that is aware that you "may let in the future" and you will be covered.

                  Provided you keep paying the mortgage everyone is happy.
                  You're right about the insurance issue, sure, but wrong to say that the lender will be happy regardless if you keep paying the mortgage. BTL mortgages always have a higher interest rate than residential, and you are would be fraudulently depriving the lender of the difference.

                  Comment


                    #10
                    Should a borrower break the terms of his mortgage agreement then the lender is entitled to request immediate repayment of the loan. By letting out a residential property without notifying the lender and requestion permission to do so, such terms may well be broken. In practice, mortgage lenders reqularly give permission to let out a mortgaged property and may only require an appropriate level of insurance to be obtained.

                    In practice, few if any lenders are at all bothered about the properties securing their finance provided the repayments are made on schedule, so you may well get away with it, but as has been mentioned above, the appropriate level of insurance is a very good idea.

                    P.P.
                    Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

                    Comment


                      #11
                      Permission for subletting required from mortgagee?

                      Hi All;

                      Im new to letting and i would like to let out my home, i have bought using a offset 100% mortgage from natwest. I would like to let the place out as i currently work at sea and am rarely at home. I intend to use a agent and have the place unfurnished. Its a 3 bed semi with garage and front and rear basic gardens.
                      I see that agents say they require permission from the mortgagee for letting the property out. Why is this and is it likely they will give permission for it?

                      From their point of view the property is insured and i have allready proved to them i can pay the mortgage, so why not further guarantee this by having another income from which i can pay it?!
                      How many of you use agents and how many simply draw up a contract and place an add, managing the property yourselves? I take it if i managed it myself i wouldnt need to inform the lender, providing i had the correct insurance.

                      Thanks for any info, Steve.

                      Comment


                        #12
                        From what I know, Natwest have a simple procedure, just drop them a line and advise that the property will be let on an 6 month AST and they should just send you confirmation back that it is OK with them.
                        Make sure you give them a forwarding address.
                        Don't do this and you will be in breach of your mortgage conditions.

                        If you are going to be out at sea most of the time, then I would use an agent.

                        Comment


                          #13
                          Thats sounds like good news! Im very new to this... AST?

                          I would prefer a agent to look after the place, but i wont leave it empty for months on end, if the mortgage company wont let me let it then i will have to privately let it and change mortgages in the mean time to a lender that will allow it.

                          Comment


                            #14
                            This is standard practice. The idea is that a mortgage is granted to enable a person to buy and live in his own home. When it is tenanted, the risks are greater thus mortgage providers want more interest! If they grant permission for a property to be let, they may lay down more conditions with regard to the type of tenants acceptable and impose additional insurance requirements. Unfortunately some of these conditions show that the senior members of the mortgage providers concerned live in ivory towers and have little knowledge of the real world! Unfortunately, if your mortgage provider finds out that you are letting without authority they might repossess even if your payments are up to date (unlikely in the real world, but possible). It is this possibility that your agent is trying to protect you from. Providers of personal mortgages will often permit the property to be leased, particularly when the circumstance of the mortgage holder have changed (job change - relocation e.t.c.) and permission may well be granted in your circumstances. However if the mortgage provider refuses, don't worry! There are tons of mortgage providers who have made good money out of granting mortgages specificially to enable people to purchase property to let out. Thus if your mortgage provider no longer wishes to provide you with secured funds, then here are plenty who will. There are plenty of brokers advertising here who can point you in the right direction.

                            There is also tons of information on this board to help you select a property agent and the pitfalls to be avoided as the property lettings agent markt is totally unregulated.

                            P.P.
                            Last edited by P.Pilcher; 28-08-2007, 17:01 PM. Reason: addition
                            Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

                            Comment


                              #15
                              They may let you lease the property but you will have to ask for consent to let, however, with a 100% mortgage and also on off-set I freckon they will want to hike your interest rate.

                              As a general rule, most BTL mortgage companies will require a 15% deposit and will also usually require 125% of the mortgage payment as the minimum rent. In addition, the interest rates are usually higher than a standard mortgage.

                              I dont fancy your chances of getting NatWest to consent under the terms you are currently on...........out of interest, let us know if they do decide to give you permission!

                              Pete

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