Will letting my property affect my mortgage?
In short: Yes, if you decide to let your home and you have a normal residential mortgage, you must let your lender know.
If you let the property without telling your lender, you are potentially in breach of contract. This is because the mortgage would have been set up under a regulated mortgage contract based on owner occupation. If you have let the property and are no longer living in it, you are no longer keeping to the terms of the mortgage contract.
Letting for a couple of years
Often, the simplest way forward is just to contact your existing lender and ask for permission to let or consent to let.
If you only want to let your property for a short time, perhaps because you have been posted abroad for a couple of years, your lender may be able to amend the mortgage contract to allow you to let the property under an assured shorthold tenancy agreement for a temporary period. There may be some change in the interest rate, but, upon your return, everything will go back to normal.
If your circumstances change, and you realise that you want to let your property on a long-term basis, your lender may insist that the mortgage is converted to a formal Buy To Let / Let To Buy arrangement.
Letting on a long-term basis
If you decide at the start to let your property on a long-term basis, and particularly if you are planning to raise additional finance (perhaps to help you buy a new main residence), it may be more appropriate to remortgage to a formal Buy To Let / Let To Buy arrangement from the outset. If you do this, you not only set the mortgage up to meet the rules for letting the property, but also you may find that any new mortgage arrangements better suit both your budget and future investment strategy.
In addition, if you’re going to move your existing mortgage arrangements to a new main residence, you would need a new Buy To Let / Let To Buy mortgage in any case.
Insurance arrangements for the property linked to the mortgage may no longer be valid if the property is to be let. It is vital that any insurance policy for the buildings or contents is amended accordingly. We can introduce you to a trusted mortgage broker.
This is one of the 50 most asked questions in our new book: Landlord Intelligence.