Whilst this may seem like a very straight forward question, the answer is rarely as easy as you would hope.
If you have a mortgage on your current home it is almost certainly a “Regulated Mortgage Contract”, one of the conditions of which will be that you are not permitted to let out the property. Generally, properties which are being let whilst having a mortgage will have a variant of a Buy to Let mortgage which are generally not regulated (with some exceptions - see below).
If you wanted to let your current home to facilitate a move you will have two main options: -
1 – ask your existing mortgage lender for permission to let the property - the upside of this can be the convenience, however the lender may not agree to this, and if they do, there will generally be extra fees and / or an increased interest rate.
2 – switch your current mortgage to a Buy to Let basis - most lenders would regard this type of application as a “Consumer Buy to Let” meaning that you did not buy the property originally with the sole intent to let it as an investment.
Each circumstance will be different and much will depend on the interest rate and repayment type of your current mortgage alongside the current lenders attitude. However, a full review of options across the mortgage market will be the initial starting point.
Having considered this element most people will also need a residential “Regulated Mortgage” for the new purchase. As there is now a property to be considered in the background, this can be slightly more complex as the fact that you are renting out the current home will be treated in different ways by mortgage lenders.
This is a potentially complicated area although relatively easy to navigate if you access the services provided by independent mortgage experts.
Paul Hardingham and Tony Ibson are Mortgage and Protection Advisers at Innovate Mortgages and Loans. Both have over 20 years of experience advising individuals and businesses across the North East of England. They can be contacted for bespoke advice at paul@innovateml.co.uk or tony@innovateml.co.uk or call 0191 223 3514.
Think carefully before securing other debts against your home.
Your home or property is at risk of repossession if you do not keep up repayments on a mortgage or other loan secured on it.
Innovate Mortgages and Loans is a trading style of Innovation Financial Management Ltd.
