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 prove to be a very expensive mistake.
If your lender catches you doing this when the terms and conditions of your mortgage specifically forbid it, they could potentially call in the entire amount of the loan.
Your mortgage agreements will almost certainly have a section relating to letting your property, so you should read them carefully before making any decisions. You may also find useful 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 quite entitled to refuse payment.
There are many reasons some people may want to let their home out, such as needing to move to take up a new job, or they may want to 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. In fact, many mortgage providers are actively looking for properties that are listed with letting agents or online websites without their permission.
But it’s not all bad news….
If you approach them, many mortgage providers are willing to consider changing your residential agreement to a buy-to-let mortgage. This will, of course, depend on your circumstances, the type of property 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 key factor is that your reason for wanting to change your residential agreement to a buy-to-let must be genuine.
As with any buy-to-let mortgage it’s all about how viable the investment is, so 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%.
The important thing to remember is that it is vital that you 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.