Renting my house and bank have upped mortgage repayment

A

Atticus

Guest
I'm about to move abroad and have let out my house making the mortgage repayment but no more on it. Contacted my bank to inform them of a change of address and ten days later got a letter saying that my home was now an investment property and increasing my mortgage repayments considerably. Rent now won't cover mortgage payments....has anyone encountered this before? Is there anything I can do? They did not mention to me when I rang to ask about changing the address that it would involve a change in mortgage rate.
 
Did you read the terms & conditions of your mortgage? Most are provided on the basis that it's your PPR, there are different rates for investment mortgages, so seems fair enough to me.
 
Hi shigllgetcha....I had written to Revenue canceling my TRS from the commencement of the rental. Revenue simply said that's fine, contact us when you're back in the house and it can be re-instated if applicable. The bank definitely didn't know I had spoken to Revenue because in their letter to increase my mortgage rate they told me it would be up to me to contact Revenue to make sure the TRS was canceled. My understanding was that while the bank could see if I am getting TRS they cannot ask anything further about that because essentially its between me and Revenue...
 
Hi Dereko1969. I had asked the bank for a copy of the mortgage document last year to check another matter....the one sent out to me was illegible (like something photocopied about 20 times). I have in the last few days obtained the original (in readable form!) from my solicitors and it makes no mention of any change in conditions for rental....hoping that will be enough!
 
Hi Atticus,

What bank are you with? There's been a number of threads on here discussing the actions different banks are likely to take in the event that you rent out your house. It'd be interesting to know what bank you are with...
 
Hi Macstuff

I'm with KBC....had always found them ok so far (well, as ok as any bank)!
 
Atticus said:
Hi Dereko1969. I had asked the bank for a copy of the mortgage document last year to check another matter....the one sent out to me was illegible (like something photocopied about 20 times). I have in the last few days obtained the original (in readable form!) from my solicitors and it makes no mention of any change in conditions for rental....hoping that will be enough!
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Does it mention that the property has to remain your PPR?
 
Atticus said:
I have in the last few days obtained the original (in readable form!) from my solicitors and it makes no mention of any change in conditions for rental....hoping that will be enough!
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Even if it doesn’t mention change in conditions if rented your bank can reasonably argue they always charged higher rates for investments, they gave you a loan for a PPR, as you no longer live there and are renting it, then it’s an investment property and they are entitled to charge the investment rate.

It seems from reading other posts here that some lenders are happy for the moment anyway to be getting payments and let it go, others don’t.

If KBC have applied the investment rate I don’t think you have an argument, it would not stop me trying though.

Good luck.
 
twofor1 said:
Even if it doesn’t mention change in conditions if rented your bank can reasonably argue they always charged higher rates for investments, they gave you a loan for a PPR, as you no longer live there and are renting it, then it’s an investment property and they are entitled to charge the investment rate.

.
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Not all investment rates were higher than normal home loans. I have an investment property on the variable home loan rate. My bank have been playing around with the 'names' of these loans but they cannot move me to investment rates.

OP needs to read his contract.
 
Thanks twofor1....I'm certainly going to argue with them about it! I figure it's worth a try....
 
Bronte said:
Not all investment rates were higher than normal home loans. .
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Maybe so, but the O/P states in his opening post ‘’ got a letter saying that my home was now an investment property and increasing my mortgage repayments considerably’’

From this I think it’s reasonable to guess that in this case anyway, the investment rate is higher than the PPR rate.

From what has been posted it looks like mortgage was originally taken for a PPR, the O/P no longer lives in it and now rents it out, the lender now considers it an investment property and have applied their higher investment rate.

We have seen many times how lenders can twist T&c’s to their advantage, and hate to see them get away with such sharp practice, but in this and similar cases, it’s tough on the borrower but I think the banks are entitled to do it.

There are many posts here about ‘’Handing back the Keys’’, if lenders were a bit more helpful by not applying higher investment rates in these circumstances where people have to rent, there might not be as many such cases.
 
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