can I rent out my house on a normal mortgage?

February 26, 2024

82
Typically, you cannot rent out your house if you have a standard residential mortgage without first obtaining permission from your lender. Many residential mortgages stipulate that the property must be owner-occupied. To rent out your property, you may need to switch to a buy-to-let mortgage or obtain a ‘Consent to Let’ from your lender, which allows you to rent out the property under specific conditions.

Understanding the Terms of Your Mortgage:

Residential Mortgage Restrictions: 

A standard residential mortgage typically requires the homeowner to occupy the property. Renting out the property under such a mortgage without the lender’s consent could violate the terms of the agreement.

Lender’s Permission: 

To legally rent out your property, you may need to obtain ‘Consent to Let’ from your mortgage lender. This permission is not guaranteed and may come with certain conditions or require a change in your mortgage terms.

Consent to Let:

Temporary Solution: 

‘Consent to Let’ is often granted on a temporary basis, usually for one year. It’s designed for homeowners who need to rent out their property for short periods, perhaps due to work commitments elsewhere or while trying to sell the property.

Potential Costs:

Lenders may charge a fee for granting ‘Consent to Let’, and it could lead to an increase in your interest rate.

Switching to a Buy-to-Let Mortgage:

Long-term Letting: 

If you plan to rent out your property on a long-term basis, your lender may require you to switch to a buy-to-let mortgage. Buy-to-let mortgages are specifically designed for rental properties and come with different interest rates and lending criteria.

Financial Considerations: 

Changing to a buy-to-let mortgage may involve additional costs, such as higher interest rates and fees. The lending criteria can also be more stringent, typically requiring a larger deposit.

Seek Professional Advice:

Mortgage Adviser: 

Before making any decisions, it’s wise to consult with a mortgage adviser. They can offer tailored advice on your situation, including the feasibility and implications of renting out your property.

Legal and Tax Implications: 

Renting out your property can have legal and tax implications. Professional advice can help you navigate these aspects effectively.

Conclusion:

Renting out a house on a normal residential mortgage is possible but requires careful consideration and the right permissions from your lender. Whether it’s through obtaining ‘Consent to Let’ for a short period or transitioning to a buy-to-let mortgage for long-term arrangements, understanding your obligations and the potential implications is crucial. Consulting with professionals can guide you through this process, ensuring compliance and making informed decisions.

Answered by:

Alison Gibson

Ascot Mortgage Expert

Last Updated:

18.03.2024

Answered by:

Alison Gibson

Ascot Mortgage Expert

Last Updated:

18.03.2024

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