Renting a Home May Involve a Buy to Let Remortgage for the Homeowner
Homeowners thinking to rent out their home may think that it is as simple as just putting out a “For Rent” sign. However, it is a bit more complicated than that and may involve the need for a buy to let remortgage. Regular mortgages are not the same as a buy to let mortgage. For a homeowner that secured a regular purchase mortgage there are steps that need to occur with your lender to allow the renting of the property.
Renting your home involves approval from your lender which could mean a simple “consent to let agreement” or as much as a move to a buy to let remortgage. It will also mean an insurance policy upgrade to a landlord insurance policy. Once all of the paperwork from your lender and insurance agency is in line, as well as other requirements for a rental property, renting should not be a problem. Rental property is in high demand currently and many rental property management companies have waiting lists for certain types of properties.
Melanie Bien, an independent mortgage broker with Private Finance, said "Although many people let their homes without informing their lenders, this is in breach of your mortgage contract. You should seek 'consent to let', which means you can rent out your home for a short period of time – usually a year or two, depending on the lender. Lenders decide this case-by-case. You'll either continue with the same mortgage terms, pay a premium or in the worst case you may have to move to a buy-to-let mortgage. This usually means a higher rate and could mean you must pay off a chunk of the outstanding mortgage to fit the lender's maximum loan-to-value requirement.”