Will I lose my Tracker if I rent out my home?

Gumbyman2000

Hi all,

I have a tracker mortgage on my family home. If I rent it out (and tell the bank to forward my Mortgage related mail to my new address) will I lose my tracker? I recall them threatening it one time when I asked about a second mortgage (they said I would lose the residential rate and go to commercial or some such jazz).

I've been worrying about it for a while. Can anybody throw some light on this?

Thanks,
Gumby.

homer911

Gumbyman2000 wrote: »

Hi all,

I have a tracker mortgage on my family home. If I rent it out (and tell the bank to forward my Mortgage related mail to my new address) will I lose my tracker? I recall them threatening it one time when I asked about a second mortgage (they said I would lose the residential rate and go to commercial or some such jazz).

I've been worrying about it for a while. Can anybody throw some light on this?

Thanks,
Gumby.

In theory, yes you would

dotsman

As homer said, yes - you will be changing the terms of the contract, so it a new contract, and thus a new rate (at commercial buy to-let rates).

However, I have heard that some banks are turning a blind eye to it and letting off customers if it is to help them out of a financially dire situation.

cmssjone

Check the T&Cs of your mortgage. My tracker is not invalidated if I am not residing in the property...

dotsman

cmssjone wrote: »

Check the T&Cs of your mortgage. My tracker is not invalidated if I am not residing in the property...

Was it taken out as a home loan or a buy-to-let?

cmssjone

dotsman wrote: »

Was it taken out as a home loan or a buy-to-let?

Home loan with AIB

Liam D Ferguson

It seems that, in practice, many banks are turning a blind eye to people renting out their homes. See here and this article by Charlie Weston in the Indo.

dotsman

cmssjone wrote: »

Home loan with AIB

Same here (I think we are among the lucky ones). The thing is, although my terms and conditions don't specifically state that I will lose my tracker if I move out, the rate is referred to as "TrackerHome LTV>50% & <=80%". Therefore, it could be argued that the rate obviously only applies if it is my home and if I treat the property as a buy-to-let (ie, move out and let the premises), that the "TrackerBTL" or whatever AIB call their buy-to-let rate would apply.

However, I don't know how well that argument would hold up in a court (don't believe a case has been brought to court yet). One would imagine that there must be some protection for the bank, though. Otherwise, what would have stopped landlord's during the good times buying the house for their "home" and then moving out the day after the contract are signed. There are many unscrupulous landlords out there, so I would be shocked if it was that easy.

Anyway, as mentioned in my post above, and as per Liam Fergusan's post, banks are generally not enforcing any provisions that they may have in their contracts. Ultimately, most people who are doing it are in financial distress, so the banks would much rather a performing low-interest-rate loan rather than a non-performing medium-interest-rate one.

Liam D Ferguson wrote: »

It seems that, in practice, many banks are turning a blind eye to people renting out their homes. See here and this article by Charlie Weston in the Indo.

cmssjone

dotsman wrote: »

One would imagine that there must be some protection for the bank, though. Otherwise, what would have stopped landlord's during the good times buying the house for their "home" and then moving out the day after the contract are signed. There are many unscrupulous landlords out there, so I would be shocked if it was that easy.

I would hazard a guess that if you only own one property then there is no problem with not being on a buy to let rate, especially if you resided there for a reasonable amount of time. For "professional" landlords, this would not be the case for obvious reasons. For the ordinary punter, as long as the mortgage is being paid, the bank really doesn't care.

Ranleth

It really comes down to the terms you agreed. We contacted BOI about this recently. Effectively they CANNOT take our tracker from us if we move out and rent. We have a home loan rate and the house will be rented as a "home". We wrote to ask for written confirmation and we got a letter stating that they would offer us a new variable rate.... but... we didn't have to accept this rate. Classic bank trickery!

Here is your new rate of 5.5%, oh you'd like to keep your tracker rate of 1% over the ECB... ah.. ok.

Check your mortgage terms and conditions, unless it states that you must reside in the house then your next step should be to contact your bank to clarify your position.

killers1

cmssjone wrote: »

Home loan with AIB

AIB's current policy is not to remove tracker mortgages from people who have rented out their properties...

Arciphel

Yeah shure let all the variable rate mortgage customers pick up the slack same as normal :-)

sungear

Gumbyman2000 wrote: »

Hi all,

I have a tracker mortgage on my family home. If I rent it out (and tell the bank to forward my Mortgage related mail to my new address) will I lose my tracker? I recall them threatening it one time when I asked about a second mortgage (they said I would lose the residential rate and go to commercial or some such jazz).

I've been worrying about it for a while. Can anybody throw some light on this?

Thanks,
Gumby.

You could probably redirect your mail by anpost, that way you would ensure any mail you may not have changed will be directed to you anyway. It would also show if anything was turning up in your name that shouldnt be. I would not have much sympathy for the banks myself,
that said I would not agree with not paying tax on earnings.

killers1

Arciphel wrote: »

Yeah shure let all the variable rate mortgage customers pick up the slack same as normal :-)

If you want a bit of insight into pricing & variable rate mortgages & trackers etc have a read of this...

http://www.centralbank.ie/publications/documents/variable%20rates-final2.pdf