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View Full Version : Mortgaged property- must landlord tell lender?



LandlordBill
19-09-2006, 21:01 PM
What are the implications if you don't tell your mortgage company that you are going to rent the property out? I have a mate who is suggesting that I follow the same course of action as he has on the basis that either they will not find out or, even if they do, they will not care.
(i) Is it a criminal offence not to disclose?
(ii) What can the mortgage company do in theory if they find out?
(iii) What will the mortgage company do in practice?

I am 100% confident that I will pay the mortgage each month - but I want to know what problems I could face? Do other people adopt the same approach? I onoy intend to rent for 6-12 months so I can't see them asking too many questions in that time and I honestly can't see why they would be too fussed as long as the rent is paid.

I am new to all this so your experiences and knowledge would be invaluable.

Thanks all

Bill

MrShed
19-09-2006, 22:14 PM
But....why not just tell them?

P.Pilcher
19-09-2006, 22:44 PM
If the mortgage company find out they could, in theory, attempt to recover the property to safeguard their loan as you have not fulfilled the conditions in their mortgage deed. Of course if you had paid all your mortgage payments on time and ensured that your insurance covered the necessary additional risks, then I suspect that they would have difficulty in getting a judge to agree to this. They could alternatively insist that you redeemed your mortgage and with so many BTL mortgages available this should not pose a problem, however, as Mr. Shed asks, why not tell them? If you say that you are being posted abroad for a period they are usually happy with this.
Anyway, I agree that if you pay your mortgage payments promptly then it is highly unlikely that the company will find out. After all, why should they make trouble for themselves?

P.P.

LandlordBill
20-09-2006, 07:29 AM
Thanks guys - the problem i have is that there is a massive redemption penalty if i move to the BTL within the next few months - they regard it as a different product (even though interest rate is higher) and so charge a whopping 4% Early repayment penalty! arrgh!