19-12-2011, 18:05 PM
I have informed my mortgage lender that I wish to let my property as I have been asked to care-take a property for aproximately a year (rent free) to over-see an extension that is being built.On what grounds could the lender not allow me to rent out my house and if they do not allow it what kind of mortgage should I seek if I wish to change lender?
19-12-2011, 18:49 PM
Residential mortgages are granted on the condition that you as the mortgage holder is living there. If you let to a tenant, the mortgage company perceive there is a higher risk of loss or damage to their investment - the property, and therefore they may refuse permission. They also take into account how long you have had the mortgage - some people buy on residential then apply to let fairly quickly, which mortgage lenders do not like as the suspect you intended to let all along. They also take note of the value of property, versus the outstanding amount owed.
Many more people are applying to let these days, due to being unable to sell in the current market, and mortgage companies are becoming wary and imposing more strict criteria for letting. You will need to remortgage on a buy-to-let basis or BTL, but often these loans require a higher deposit, so you may not be considered suitable unless you can raise this.
Even if they agree, they will probably impose a set-up/admin fee and possibly increase your monthy payments. They can also insist the amount of rent you must charge any tenant.
As you are only looking to let for a short time and appear new to this, do you understand all the legal obligations of becoming a landlord? You will need landlord based property insurance (and contents cover if you are leaving furniture for a tenant's use), EPC, Gas safety cert if any gas at the property. You will also need to vet and credit check your tenant's thoroughly, draw up a legally binding tenancy agreement, take a full and thorough inventory of each room and its decore, flooring, fixtures and fittings, take a security deposit and secure it in a government scheme. You should also be aware, they even though you have a timescale of a year in which you wish to let, you cannot ensure tenants will leave when you require the property back, and you may need to resort to a court order to evict them if they choose to ignore your notices to move out. You must also declare your rental income for tax.
19-12-2011, 20:27 PM
Is the interest part of the monthly mortgage payment tax deductable? I ask this as the majority of my monthly mortgage payment seems to be interest so does this mean that most of my mortgage payment can be offset against the tax on my rental income?
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