# Will renting wreck my tracker?



## Draigean (13 Apr 2011)

An interesting letter to Dominic Coyle in Monday's Irish Times.

I post it here, as I may be in a similar situation soon.  

PERSONAL FINANCE: Your queries answered

Q 

My daughter has a tracker mortgage with Permanent TSB. Her boyfriend also has a property with his own mortgage which is not a tracker. They want to move in together and rent my daughter’s apartment. The rent should cover most of her mortgage, and she will pay “rent” to her boyfriend to help with his mortgage. 

If they proceed on these lines will she be breaking the terms and conditions of the tracker mortgage and then be exposed to a negotiation of a new mortgage and lose the tracker benefit? 

- Mr D McM, e-mail 

A 

As you correctly perceive, a tracker mortgage is a contract – in this case between your daughter and the lender. She should certainly check with Permanent TSB before making any decision. It may be that the mortgage contract requires her to be an “owner-occupier” in order to avail of the terms of her tracker rate. Renting out her apartment could prove more costly than she thinks if it costs her the tracker.​
I was wondering if anyone had any experience of this?  Have any of you had to "lose" your tracker mortgage in order to rent the house out?

Another related question, how does the above scenario affect FTB status and mortgage interest relief?  I bought my house as an FTB, however I fear that I would be liable to "clawback" taxation if I was to rent it out if I broke the owner-occupier terms.  This may also impact on mortgage interest relief.

Two points to note:
When I come to this situation, I will seek professional advice, but was interested in the public experiences.
I intend to do this legally, rather than chance my arm.


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## pmorddny (13 Apr 2011)

This is a timely question. We are just looking into this ourselves. I assumed I'd lose the tracker mortgage if I rented the house since it's an owner occupier mortgage. Hopefully someone has some good news for me.

Paul


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## Draigean (14 Apr 2011)

I'm considering the options and none of them are very appealing.
The house is in Dublin, there are 25 years left in the mortgage and last month I paid €950 in mortgage payment.  That figure will be more this month and is due to increase for the foreseeable future.

My options are:

Clear the mortgage.  Oh, if it were only that easy.
Sell the house at a loss of about €125,000.  However, in order to do so I'll need to stump up about €75,000 to clear the mortgage.
Hand back the keys.  Exclude myself from being eligible to credit for 12 years.
Rent the house out and get a new mortgage, at a significantly increased mortgage rate that will not be covered by the rent.
Board the house up and come back in decade.  However, does "owner-occupier" indicate that I have to occupy the house?

Strangely, the last option (if the bank permit it) may be the most economically viable.


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## aristotle (14 Apr 2011)

One of your options - "Hand back the keys. Exclude myself from being eligible to credit for 12 years." - also means you are liable for the difference between the price that the house gets sold for and the remaining mortgage.


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## Brendan Burgess (14 Apr 2011)

No need for a new thread. If there is some additional information, reply to the Key Post on the topic

http://www.askaboutmoney.com/showthread.php?t=140086

Brendan


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