Discussion
Do all BTL Mortgages come requiring such high deposits and why? Presumably it's risk, but why are they riskier than a normal mortgage? What are the implications of renting out your property without notifying your lender? I am aware that HMRC will come after you as well, but would they just ask for the tax back or can they fine you as well?
chimster said:
Do all BTL Mortgages come requiring such high deposits and why? Presumably it's risk, but why are they riskier than a normal mortgage? What are the implications of renting out your property without notifying your lender? I am aware that HMRC will come after you as well, but would they just ask for the tax back or can they fine you as well?
Historically they have not been riskier than owner occupier mortgages, but that has been because of the bigger deposits and possibly to a lesser extent the profile of borrowers.Implications of not telling your lender about renting out the property - in practice very little because they probably won't find out. But if they do they may call in the loan or insist that you stop.
If you make a profit from renting the property you should declare it as income and pay tax. If you don't and if you're caught out you'll need to pay back the tax plus interest and probably a fine.
Not all BTL mortgages require high deposits.......there are products at 15 or 20% deposits for the right customers/profiles. BTL mortgages are naturally a higher risk as they are fundamentally underwritten based on receipt of rental income to pay the mortgage. Although most lenders now underwrite BTL mortgages to the same criteria as residential mortgages to reduce the impact of void periods.
As already mentioned, renting out your property is contravening the terms and conditions of your residential mortgage. Whilst they may never find out, if they do they can insist you move on to a BTL product, increase your interest rate or even call in the loan.
Also, there are serious implications around insurance if you are renting a property out. You will need the relevant landlords insurance and in the event of a claim, it wouldn't be unrealistic for them to ask to see evidence that you actually have a BTL mortgage or at least consent to lease, before paying out.
As already mentioned, renting out your property is contravening the terms and conditions of your residential mortgage. Whilst they may never find out, if they do they can insist you move on to a BTL product, increase your interest rate or even call in the loan.
Also, there are serious implications around insurance if you are renting a property out. You will need the relevant landlords insurance and in the event of a claim, it wouldn't be unrealistic for them to ask to see evidence that you actually have a BTL mortgage or at least consent to lease, before paying out.
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