Can I Rent Out My House Without Telling My Mortgage Lender?

The pitfalls of renting your home without telling your lender.

Renting out your home and failing to notify your mortgage provider about it could be a very expensive mistake.

If your lender catches you doing this when the terms and conditions of your mortgage expressly forbid it, they could call in the entire loan amount.

Your mortgage agreements will almost certainly have a section about letting your property, so you should read them carefully before making any decisions. You may also find helpful information on your mortgage provider’s website.

To let a property, you will also have to take out landlord’s building insurance, and should you ever need to put in a claim, the insurer is reasonably entitled to refuse payment.

Some people may want to let their homes out for many reasons, such as needing to move to take up a new job or move into a property they have inherited.

These are called ‘accidental landlords’, as they had no intention of letting the property when they took out the mortgage. Many mortgage providers actively look for properties listed with letting agents or online websites without their permission.

But it’s not all bad news….

Many mortgage providers will consider changing your residential agreement to a buy-to-let mortgage if you approach them. This will, of course, depend on your circumstances, property type, and the terms and conditions stated in your original agreement.

Each lender has a different policy on this. Some need you to have lived at the property for at least six months. Some may alter the interest rate or charge an administration fee, while others may let you keep the original mortgage agreement without any changes.

The critical factor is that if you want to change your residential agreement to a buy-to-let, it must be for a genuine reason.

As with any buy-to-let mortgage, it’s all about how viable the investment is. You will also need to provide your lender with details of projected rental income, which has to cover the mortgage payments, usually by at least 125%.

Remember that you must inform your mortgage provider before letting your property.

You can find more detailed information about investment property mortgages in our complete guide to buy-to-let mortgages.