Renting out your house might seem like a no-brainer if you’ve been offered a secondment abroad, are struggling with your finances or simply fancy trying out a new area.
However, whatever the reason, if you have a mortgage, you must not rent out your house without first informing your lender. In all likelihood, this will mean you must gain their explicit permission. Here’s why.
You Will Breach the Terms and Conditions of Your Mortgage
Your initial mortgage contract will prohibit renting out the property without gaining the mortgage provider’s express permission. Press reports make clear that this can also encompass letting out on the Airbnb platform. Going ahead without gaining this permission is no small matter. The lender could call in the entire sum outstanding on the mortgage – and if you can’t pay it, you’ll be evicted.
Your Mortgage Company Will Find Out
It also will not be a matter of chance if your mortgage company discovers that you have rented out your property without seeking their permission. For several years now, mortgage providers have engaged in active searches of the rental markets in order to find those properties that have been let out without consent.
Doubtless you’ll now be asking how – or even whether – you can let out a mortgaged property. Thankfully, the answer to this is usually “yes”. Doing so requires seeking a “consent for lease” from your mortgage provider.
When Will a “Consent For Lease” Be Granted?
Check your mortgage provider’s website for the circumstances in which consent to let may be granted. You can expect a negative answer if the provider considers that you bought the property with the undeclared intention of letting it out. This means that the change in circumstances prompting your wish to rent out the property must be genuine. Although this might seem difficult to prove, paying the mortgage for a minimum period of six months before making the request usually helps.
Once approved, you can go ahead with letting out the property. Don’t forget to organise a professional inventory via a company such as https://inventorybase.co.uk/ that uses property inventory software.
If your application is approved, you should expect your interest rates to rise between 1% and 2%. There will also be an administration fee.