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Looking to move house, but as we sensibly (or so we thought) went for a 5yr fixed rate deal we have a hefty early exit fee on our mortgage which has 3 yrs to run.
So far renting our next house looks more appealing as we can't find anything we fancy buying, but does leave us with a decision about what to do with current house...
So, any advice?
Will your current lender allow you to rent it out? Might have to switch mortgage for that.
Are house prices likely to go up in your area over that period? Might not be good to be out of the market for so long.
Will you be close enough to manage the property if rented out?
Just been through a similar thing.
Check with your mortgage company whether they'll give you 'Consent to Let' before you get tenants in.
They may do it without question, they may charge a fee, they may say no, or they may have other conditions. We needed to up the equity in ours so that the rental income was a certain percentage of the monthly mortgage payment.
If you let your house on a normal mortgage you may be breaching the T&Cs of it. Loads of people do it without telling the mortgage company, but I wouldn't want to risk it.
Rent it out but make sure you can cover both rent and mortgage plus all bills for say 3-6 months to cover any gaps.
Many houses are rented without informing the mortgage company
@ambientcoast - if you don't miss a mortgage payment it's highly unlikely the bank will ever notice. They have more things to worry about
@ambientcoast - if you don't miss a mortgage payment it's highly unlikely the bank will ever notice. They have more things to worry about
Trust me, the one time they ever did notice by chance, it would be my house that they noticed. 😆
Many houses are rented without informing the mortgage company
As long as you aware that a [u]risk exists[/u], if they do find out... though [i]"a friend"[/i] phoned his mortgage company when moving in with his g/f and they were like "you want to do what?" (worst customer service call ever), and so rented it out anyways and got away with it (inheritance came through so he was able to **** them off before they found out), [i]he[/i] did worry about it but assume if the mortgage is paid on time, they really don't care.
Is insurance an issue?
I rented a room out without telling the mortgage company - I unofficially let it drop that I was doing that and was told I should let them know properly but never did.
@mudshark - two different questions insurance co vs mortgage co
Statistics and experience show that owner occupied properties are less risky for banks than properties rented out. That's why buy-to-let mortgages are more expensive. The worst thing that the bank is likely to do is put your rate up. Banks process 1000s of mortgages on automatic systems, if the payments come in nothing will ever flag up a change, how can it they have no information.
Thanks for the thoughts all, to answer the questions:
we would be looking to move around 2 miles away, so could manage looking after the house when rented out rather than using and agent.
We are with the post office (Bank of ireland) and their terms indicate we could get consent to let, at a fee, no mention of needing to achieve a certain percentage of the mortage in rental, really need to phone them to ask though.
No idea on values going up/down, who knows really, which is why it doesn't seem a good idea to sell then rent…
Biggest issue is finding something in the location we want to move to...
Will you ever want to live in the old house again? If so, can you treat it as a business when you rent it, not mind it needing refurbs and people treating it differently to how you would?
Renting it out sounds like a good option if you want to keep it long term, but if you're going to want to sell it at some point in the next few years to release equity to buy again then I'd sell it soon if I were you and get a good price for it now.
All the important indices pointing to the fact that the market has well and truly peaked and the bubble is about to burst, or at least deflate somewhat.
interesting info agent007, can you point me towards anything to read on the subject?
We doubt we would ever want to move back into it, but thought it might be a good option to get through to end of fixed term.
All the important indices pointing to the fact that the market has well and truly peaked and the bubble is about to burst, or at least deflate somewhat.
Said everybody, wrongly, since about 1973.
I'd still agree that if you're not keeping it long term, I'd look to sell. The setup costs and risk of rental voids and damage would likely outweigh the fee to get out of your mortgage fix. Is that a standard charge or a hefty percentage, or just a straight lock-in?
5% fee, so reasonably hefty, works out a bit over 7k 🙁
interesting info agent007, can you point me towards anything to read on the subject?
There's hundreds of indicators, interest rates soon rising, restrictions on loan to income, tighter affordability criteria just introduced, shares in the big housebuilders starting to fall, building more homes (increasing supply) becoming a hot political topic, etc, etc.
The government & BOE has thrown everything it can at the housing market to protect prices over the last few years to protect votes and protect the banks. Seems to be a real change in sentiment over the last couple of months though.
This is my opinion of course but I could be completely wrong. However can't honestly see many valid indices that show how prices can keep on rising but I'd be interested to hear if anyone has anything?