Difference between loan approval and T&C's

I am considering renting out my property (PPR) in the coming weeks, a few months ago I requested a copy of the term and conditions from my bank, what i received was a copy of the letter of loan approval, what is the difference between both ?. There was no mention of me loosing my tracker and no mention of me having to inform the bank if i was to rent it out.

Having read the other forums here it seems the only to know for definite is to check the T&C's but how can i do this if the bank wont send me a copy and sent me a copy of the loan approval .

Any advice would be great.

The loan/credit agreement contract itself contains the detailed T&Cs - just ask the lender explicitly for a copy of their standard loan agreement contract.

hi clubman thanks for your reply, i'd presume if i get a copy of their standard loan agreement it would differ from my original agreement as i took my loan out in 2005 and i think there would have been many changes since then.

Sorry - I didn't realise that you already had a loan out. In that case just ask them again for a copy of the loan agreement that applies in your case. I would assume that they can give you this? They may have simply misunderstood your first request for same?

This issue has come up on previous posts. From a contract basis the L/O is your agreement with the Bank. A HL L/O usually contains the clause that the property in question is currently and for the duration of the agreement used as your PPR. In the event of a change in this agreement the Bank cannot simply change the rate on the loan from tracker. They will need to invoke the contract on the basis that you have reneaged on this clause in the agreement. This means that they can call in the debt. In practise I have never seen this happen. I can't speak for all banks but I note from my own experience that if loan repayments are being made on line there is a low risk of any query being raised as to the current use of the property. It is possible that a Bank could take this approach but I don't see it as being a significant risk provided the full loan repayments continue to be met.

44brendan said:

This issue has come up on previous posts. From a contract basis the L/O is your agreement with the Bank.

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I remember when I had a mortgage with EBS years back I had (a) a loan offer letter and (b) a separate set of loan agreement/contract terms & conditions. Is that not the norm with all lenders?

I can't speak for all banks but I note from my own experience that if loan repayments are being made on line there is a low risk of any query being raised as to the current use of the property.

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What about the other thing that has been mentioned before - when you rent the property you can no longer insure it as an owner occupier and the lender will be notified (via letter of indemnity from the insurer) given their interest in the property?

HI clubman i have a copy of the loan approval / agreement just not a seperate copy of the T&C's but if im reading your reply correctly 44Brendan the loan approval should contain the t&c's so what i have is sufficient and there is not mention about it being my PPR just the standard if you dont pay your mortgage your home will be at risk etc, the rest of it just gives a breakdown of repayments and interest rate.

A L/O can contain he full T&C's of the facility or alternatively and currently more frequently the L/O will just contain the T&C's specific to your loan and will incorporate a clause including the bank's standard T&C's for the product. In that case the Bank will attach the standard T&C's to the L/O.
If you have a copy of the L/O you will either have the full document incorporating all T&C's or L/O will reference the standard T&C's. Obviously if the L/O does not include any reference to other T&C's you are not bound by them. I note from my own experience in banking that the PPR clause was not included as a condition in our documentation. However Banks will differ.
Clubman I acknowledge that the fire cover issue has some potential to advise lenders of a change in use. However speaking from experience in 1 major financial institution we had no vendetta in chasing people off tracker rates. we had enough problems in dealing with clients who weren't paying!!

I actually rang my insurance company today looking for information about insuring the house as a landlord, i specifically asked if any information is passed to the bank which i was informed it was not unless the bank requested it for a specific reason.

It's my understanding that the lender will normally require/ask for a letter of indemnity from the current insurer noting their interest in the property. I can never remember if the lender gets/requests this from the insurer directly or from the mortgage holder. A friend of mine just switched home insurance and the lender (BoI) are looking for details of the new cover including policy schedule and letter of indemnity.

What tends to happen is that the Bank security dept "should" confirm directly on an annual basis that the fire cover is paid up to date and in order. While technically insurance companies should advise the Bank if a policy lapses they almost never do this. Also unless there is a problem with the loan most Banks don't acctually do the annual check as it is labour intensive.

hi just an update found the letter of approval, special conditions, the general loan approval conditions and the mortgage conditions, which is all i need, and there is absolutely no mention anywhere that i have to notify the bank if im renting out the house , that is an unbelievable weight of my shoulders, all dated in 2005 so if anyone else is in the same boat as me who took out a tracker back then it might be a relief for you that they never thougth of putting it in as a condition. Since there is nothing in any of the above there is no way they can take my tracker off me. Please dont let anyone burst my bubble by tellig me different

No. I suspect that there is very little if any actual cases of this occurring. best of luck with the letting. Make sure you properly address TRS issue and registration as a landlord.

hi thanks very much, i have no TRS so thats one thing off the to do list, i'll definitely register as a land lord and let revenue know etc,