# Tracker mortgage - can I rent out?



## Libretto (26 Feb 2012)

I took out a tracker mortgage with AIB in early 2003. In the mortgage documents there is a section titled 'Covenants by the Mortgagor' and in this (section j) it says 

"The mortgagor hereby covenants with the bank during the continuance of the mortgage: Not to convey transfer assign demise or let or part with the possession of the mortgaged property or any part thereof or any interest therein without the express prior consent in writing to the bank"

Couple of questions I'd appreciate opinions on please:


Does this mean that I cannot rent out the property without the banks consent?
Supposing I had rented it out for the past year or more - how would the bank ever know?
Surely the banks are just glad the repayments are being made?
Many thanks...


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## LDFerguson (27 Feb 2012)

Does this mean that I cannot rent out the property without the banks consent?  *Yes.*
Supposing I had rented it out for the past year or more - how would the bank ever know?  *In many cases, they wouldn't unless you tell them.  That's an ethical question for you.  *
Surely the banks are just glad the repayments are being made?  *Only up to a point.  Your tracker rate is probably losing them money.  If you tell them you're renting, they could theoretically charge you a higher interest rate.  That said, I haven't heard examples of AIB actually doing this to date.  *
Have a look at this thread and all the other threads here for other discussions on this topic.


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## cbyr1983 (27 Feb 2012)

LDFerguson said:


> Does this mean that I cannot rent out the property without the banks consent? *Yes.*
> Supposing I had rented it out for the past year or more - how would the bank ever know? *In many cases, they wouldn't unless you tell them. That's an ethical question for you. *
> Surely the banks are just glad the repayments are being made? *Only up to a point. Your tracker rate is probably losing them money. If you tell them you're renting, they could theoretically charge you a higher interest rate. That said, I haven't heard examples of AIB actually doing this to date. *
> Have a look at this thread and all the other threads here for other discussions on this topic.


 
Just want to explore the theoretical reason they could charge a higher interest rate. 

Provided there is no contractual implication for the interest rate, as in, nothing in the contract which says the interest rate defaults to a standard variable if the house is let, are you basing this power on the control of the consent?

That is, that as they can _not_ consent, you risk incurring greater loss and they thus hold you over a barrel regarding the interest rate.

Just interested to hear your thoughts if there is nothing stipulated in the contract regarding changes in rates.


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## LDFerguson (27 Feb 2012)

I don't know if the loan offer wording goes further than what Libretto posted, to specify under what circumstances AIB could alter the rate.  

I understand that National Irish Bank have the following wording in some (all?) of their tracker offer letters: 

‘’The property upon which your loan is secured must remain your Principal Private Residence for the life of your loan. If such property ceases to be your PPR we reserve the right to convert your LTV rate to our then applicable Investment Home Loan rate (fixed or variable as the case may be). You must certify to us that the property is your PPR at date of drawdown and on the date of any renegotiation’’


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## Libretto (27 Feb 2012)

LDFerguson said:


> I don't know if the loan offer wording goes further than what Libretto posted, to specify under what circumstances AIB could alter the rate.
> 
> I understand that National Irish Bank have the following wording in some (all?) of their tracker offer letters:
> 
> ‘’The property upon which your loan is secured must remain your Principal Private Residence for the life of your loan. If such property ceases to be your PPR we reserve the right to convert your LTV rate to our then applicable Investment Home Loan rate (fixed or variable as the case may be). You must certify to us that the property is your PPR at date of drawdown and on the date of any renegotiation’’


 
Will take another look but there is definitely no mention of 'PPR' in entire document.


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## LDFerguson (28 Feb 2012)

Libretto said:


> Will take another look but there is definitely no mention of 'PPR' in entire document.


 
You'd also need to check if there's a "catch-all" condition which specifies what actions AIB can take if you break any of the conditions.  

In some of the other threads other AIB customers have written to AIB.  Perhaps that might be a simpler solution for you?


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## Bronte (28 Feb 2012)

That clause looks more like a title clause as in you cannot transfer the title by granting a long term lease etc. Doesn't seem to imply an ordinary rental but you never can tell. 

Your options are to ask AIB is it ok to rent risking losing your current mortgage rate or say nothing as many people do. Banks will take any opportunity to put you on a higher investment rate. But they can only do so if there is a clause in your contract saying they can. 

Don't forget to cancel your TRS via revenue, not the bank. Also change your house insurance to landlord insurance. And most importantly register with the PRTB.


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## BICIP (20 Apr 2012)

Hi im in similar boat with ptsb. Tracker got in 2005 but weve no idea what the contract says...would I have to contact ptsb to find out?


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## LDFerguson (20 Apr 2012)

BICIP said:


> Hi im in similar boat with ptsb. Tracker got in 2005 but weve no idea what the contract says...would I have to contact ptsb to find out?


 
You can ask your solicitor for advice or PTSB could give you the definitive answer.


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