Do you tell bank if renting out property

shuvvy

Hi,

Anybody able to tell me if I must legally tell bank if I rent out my home? My mortgage interest rate would change dramatically and I need to find out where I would stand on this.

Wile E. Coyote

You should but they'll never find out either way so why commit yourself to handing over the extra cash each month.

shuvvy

Legally I should or morally I should?! Don't get me wrong I don't want to tell the bank if I don't absolutely have to but just afraid that there could be legal ramifications if they did somehow find out.

Thanks for replying.

chris85

shuvvy wrote: »

Legally I should or morally I should?! Don't get me wrong I don't want to tell the bank if I don't absolutely have to but just afraid that there could be legal ramifications if they did somehow find out.

Thanks for replying.

Legally. the rate you are on would be on the basis of the property being your primary residence. Also if you are getting TRS it will be on the basis of the property being your primary residence. Terms would state you must inform them if this changes.

If you are renting it out it would not be viewed as your primary dwelling and you could be subject to a different interest rate, possibly one for investment mortgage as you will be gaining income from it.

Also you will need to change your home insurance as and i am not 100% but this will mean you have to inform your lender of this as they have the mortgage secured on the property.

unclebill98

Can any one point out one case where a bank have moved someone from their existing rate to a buy to let rate?

I've not heard of any.

I've seen it plenty of time but the banks don't budge the rate and if the customer is in difficulty they treat it all the same.

unclebill98

chris85 wrote: »

Legally. the rate you are on would be on the basis of the property being your primary residence. Also if you are getting TRS it will be on the basis of the property being your primary residence. Terms would state you must inform them if this changes.

If you are renting it out it would not be viewed as your primary dwelling and you could be subject to a different interest rate, possibly one for investment mortgage as you will be gaining income from it.

Also you will need to change your home insurance as and i am not 100% but this will mean you have to inform your lender of this as they have the mortgage secured on the property.

Yes trs and hi would have to change. All the bank are told about trs is to stop given it and as for the HI, the bank don't need to be told anything different as the current HI still protects the house, it just changes the insurance cover.

Op, call your bank and run it past them as a general query.

chris85

unclebill98 wrote: »

Can any one point out one case where a bank have moved someone from their existing rate to a buy to let rate?

I've not heard of any.

I've seen it plenty of time but the banks don't budge the rate and if the customer is in difficulty they treat it all the same.

It happens. The bank would love any opportunity to raise rates. You cant just ask to point out a case where this has happened. This would not be in the public domain.

There is also the case of TRS. If this is being claimed on a rented out property it is tax evasion as it is not the person's primary residence.

JodTT

unclebill98 wrote: »

Can any one point out one case where a bank have moved someone from their existing rate to a buy to let rate?

I've not heard of any.

I've seen it plenty of time but the banks don't budge the rate and if the customer is in difficulty they treat it all the same.

I was moved from an existing rate to a Residential Investment Mortgage rate by KBC bank when I wrote to ask them to change my correspondence address. They were quick to want to know the reason why and I explained that I could no longer afford to live in the house and had to move out and subsidise the mortgage payments with rent coming in. Didn't make a difference to them - they slapped another 1% on top of the rate I was already on.

So believe me.... they do!!!

unclebill98

Fair enough. I would say it not as common across the board.

3DataModem

JodTT wrote: »

I was moved from an existing rate to a Residential Investment Mortgage rate by KBC bank when I wrote to ask them to change my correspondence address. They were quick to want to know the reason why and I explained that I could no longer afford to live in the house and had to move out and subsidise the mortgage payments with rent coming in. Didn't make a difference to them - they slapped another 1% on top of the rate I was already on.

So believe me.... they do!!!

Thanks for posting.

I have heard lots of hearsay, but no actual personal experience.

My own experience is that this has NOT happened.

3DataModem

unclebill98 wrote: »

Yes trs and hi would have to change. All the bank are told about trs is to stop given it and as for the HI, the bank don't need to be told anything different as the current HI still protects the house, it just changes the insurance cover.

Op, call your bank and run it past them as a general query.

Tell revenue about TRS, they tell bank, bank probably won't care. Lots of reasons you may not be eligible for TRS, none of bank's business.

Tell home insurer. They WILL tell bank, bank probably won't care.

crossmolinalad

And if you moving out of the house you have to inform the tax office too
You will lose your mortgage interest relieve
A friend of mine didnt
His tenant asked for rent relief on the same address
He had to pay it all back with huge fines

unclebill98

3DataModem wrote: »

Tell revenue about TRS, they tell bank, bank probably won't care. Lots of reasons you may not be eligible for TRS, none of bank's business.

Tell home insurer. They WILL tell bank, bank probably won't care.

This is my thinking on this.

While it's happened to others I'd say this is by far the more common result.

chris85

unclebill98 wrote: »

This is my thinking on this.

While it's happened to others I'd say this is by far the more common result.

roll a dice!