Complying With Buy-to-Let Mortgages

Becoming a landlord can be a profitable business for some, or it may occur as a simple byproduct of letting a room just to help you earn equity on a property. Whether you buy and let homes for a living or you’re trying this as a one time thing, or even ended up in this situation by accident, the important thing to note here is selecting the right kind of mortgage. If you do not own a property outright and get caught letting a room without “Consent to Let”, you could loose your mortgage, and if unable to repay all that you have borrowed, loose your property entirely.

Playing by the rules

It can be tempting not to declare that you intend to let your property due to the higher rates incurred with buy-to-let mortgages. This is because if a property ends up unoccupied, it’s likely that borrower won’t be able to make repayments, making it a higher risk investment for the lender, and more expensive for the landlord.

If you intend to rent your property out right from the start, make sure you research buy-to-let mortgages. It can be hard to come by a good deal, particularly if you are a portfolio landlord, so using an online mortgage broker to compare multiple deals can be a really handy.

Occasionally people end up becoming “accidental landlords” which is to say a change of circumstances lead to them renting out all or part of their property. This situation does not exempt you form needing a buy-to-let mortgage, despite the fact you already have a mortgage, and as the title suggests, this wasn’t part of the plan. In fact, this is where you are more likely to get caught out, so it is all the more important to adjust your finances accordingly, or face being forced to pay back your mortgage at once.

When this situation arises, you must request “Consent to Let” from your lender to make them aware of your new circumstances. This will allow you to keep your current mortgage and let out the property for a period of time as dictated by the “Content to Let” agreement you come to with your lender.

Some lenders may not allow for this, particularly if you have not yet made significant repayments on your mortgage. Alternatively, you might choose to buy another home and start letting your original property. In these cases it would be required to adjust your mortgage to a buy-to-let arrangement, as well as switching your insurance to landlord insurance along with other vital changes.

As previously mentioned, the conditions of a buy-to-let mortgage can be significantly harsher, and even though your situation dictates it, lenders can still be tough when it comes to approving your application. But just because one lender turns you down, it doesn’t mean that all will. So put in the research or use an online mortgage broker to assess multiple deals, and you’re sure to find one that suits you.

The bottom line is, if you originally take out a manageable mortgage, you will be unlikely to run into a situation that lands you in danger of loosing your property. Make informed mortgage decision right from the start to avoid messy outcomes further down the line.

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