Can you rent your house when you have a mortgage?

Money’s getting tighter these days so could you boost your income if you rent your house when you have a mortgage. Moving in with parents or a partner may seem a great idea to get you through the predicted downturn.

But before you make plans to deal with the soaring cost of living, your mortgage lender may have something to say first!

Do I need to tell my lender?

If you rent your house when you have a mortgage without your lender’s knowledge, it could cost you. The terms and conditions of your mortgage may ban you from renting. As a result, they could recall the entire amount of your loan.

Within the small print of your mortgage agreements there will be a section relating to letting your property.

If you flout the rules and your lender finds out, then you have broken the contract. Like any contract, they would have the right to take legal action.

Do I need to change my mortgage?

When buying your house, you will have undoubtedly taken out a residential mortgage. At the time your plans will have been to live there until you needed to upsize, downsize or pay the mortgage and interest in full.

But plans change! And if you’re needing to take up a new job or have inherited a property you plan to move to, you’re suddenly in a different position. If this life-change is only temporary, your lender may give you a ‘consent to let’.

What is consent to let?

It’s pretty much what it says ‘on the tin’. Lenders allow you to rent your house without you having to change your mortgage. It tends to only last for a period of time, usually a year or until your fixed-rate mortgage comes to an end.

While this is helpful, be aware that most lenders charge you for consent to let. It maybe a fixed fee or a higher interest rate. In some cases, it’s both!

What if it’s a long-term rental?

If your thinking of something longer term, then you will need to apply to switch to a buy-to-let mortgage. Contacting a mortgage broker is advisable at this point.

There’s a different policy for each lender and some require you to have lived at the property for at least six months. Buy-to-let mortgages are more business orientated, so you’ll have to prove how viable the investment is. Lenders require you provide details of projected rental income, which usually has to cover the payments by 125%.

What should I do next?

Get expert advice first. Don’t let your home, or even a room to a lodger without speaking to a mortgage adviser. If you want to know more, then you can contact our team today.

Remember, your home may be repossessed if you do not keep up repayments on your mortgage.
You may face fees or be asked to repay your mortgage in full if you rent your property without your lender’s consent.