Mortgage Provider Implications if FTB lets property

N

Nozwoz

Guest
When a FTB lets a property (all taxes etc paid), I understand that they have to inform their mortgage provider. Does anyone know if this makes any difference to the mortgage arrangements?
 
Depends on the loan agreement/lender. They may want to try to switch you to a buy to let loan/rate. Your insurance will most likely need to change too (and owner occupier policiy will no longer be sufficient) and as a party with a vested interest in the property the lender will be interested in this too.
 
Thanks Clubman.

Insurance is sorted too, the only thing outstanding is informing the provider, which I am a bit wary about, mainly because I don't have a clue what will happen! If they were to ask about switching to a different loan package, would I have to go through a full application process? I'm always employed, but generally on short term contract or consultancies, after a slight change in career direction since buying the property. Because of this, I would prefer not to put together a new mortgage application at the moment - but I am financially sound. My other option is to leave it a a few months until I contact them, as things will have settled down a bit by then and it would be much easier for me to satisfy all their requirements. Any advice?
 
If I was you I would say nothing to the lender, what's the need? For sure tell the house insurance company you are renting, you will in all likelihood have to change your insurance type and pay extra.
 
As long as the mortgage is being paid and the banks security is protected (buildings insurance, which you have) then i don't see the problem.

I have never come across a condition of a loan that the property remain a PPR or that the borrower should inform the lender. I didn't when i moved out of my first place.
 
I believe you have to request permission from the Mortgage Provider.
In general they will allow this as they actually want the mortgage to be paid, but it is far better than just informing them. I did this in England when moving Jobs and I had to pay a small fee( £50 ) as well.

I didn't have to change anything either. Be aware that there will be other implications like losing mortgage interest relief, and that you can only consider interest repaid as an expense, not any repayment of capital. For this reasomn, you should probably switch to a primarily interest based mortgage.
 
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