Bank demanding that I change mortgage

eam77

I have a property that I have a mortgage on and we recently decided to rent it out. Our mortgage lender is saying we have to change from residential mortgage to a buy to let mortgage.
Is it technically applying for a new mortgage?
Are we going to be better off or worse off by changing?
Or if we ignore them and carry on repaying the residential mortgage, will they chase us to change anyway?
Any help will be appreciated. Thanks

awec

The bank knows you're letting it out so you won't get away with not changing, I am pretty sure you'd be considered in breach of your original mortgage contract at this stage.

You'll be worse off as interest rates on BTL are a lot higher, around the 5% mark.

JustAThought

How did your bank know you are letting it out?

Of course if you decide not to let it out, will they continue to demand that you change mortgage product?

Best advice I got before I was lucky enoug to be able to take out a mortgage was never to have my active ‘money’ account with the same bank as my mortgage as it would allow them to see everything that was going on financially in my life. It was extremely good advice, whomever told me did me a huge favour.

awec

JustAThought wrote: »

How did your bank know you are letting it out?

Of course if you decide not to let it out, will they continue to demand that you change mortgage product?

Best advice I got before I was lucky enoug to be able to take out a mortgage was never to have my active ‘money’ account with the same bank as my mortgage as it would allow them to see everything that was going on financially in my life. It was extremely good advice, whomever told me did me a huge favour.

It was fairly nonsense advice, it's one of those old wives tales things.

Your bank can't just open your accounts and browse through your transactions as it pleases.

JPA

awec wrote: »

It was fairly nonsense advice, it's one of those old wives tales things.

Your bank can't just open your accounts and browse through your transactions as it pleases.

They can request 6 months bank statements though.

XsApollo

I presume the insurances are void also if you are letting instead of living in it?

awec

JPA wrote: »

They can request 6 months bank statements though.

When applying for a mortgage? Of course? They have to request it though, and even your own bank will need your permission to look at your accounts that you hold with them.

Synode

How did the bank find out you're letting it

Witcher

awec wrote: »

When applying for a mortgage? Of course? They have to request it though, and even your own bank will need your permission to look at your accounts that you hold with them.

That's completely incorrect.

awec

Witcher wrote: »

That's completely incorrect.

What part?

You think Joe Bloggs in the bank can open up Witcher's accounts whenever he wants and see what you're spending your money on?

eam77

Synode wrote: »

How did the bank find out you're letting it

Let it slip when asking for a payment break...

Synode

Yeah you're goosed then

Witcher

awec wrote: »

What part?

You think Joe Bloggs in the bank can open up Witcher's accounts whenever he wants and see what you're spending your money on?

Yes and I know this because I worked in banking.

There is no mechanism to 'request permission' to access an account, all I can say to that fanciful notion is LoL.

awec

Witcher wrote: »

Yes and I know this because I worked in banking.

There is no mechanism to 'request permission' to access an account, all I can say to that is LoL

So you just opened whatever account you wanted, whenever you wanted?

Witcher

awec wrote: »

So you just opened whatever account you wanted, whenever you wanted?

You could if you wanted to.

awec

Witcher wrote: »

You could if you wanted to.

Without repercussion or consequence? All above board and legit to do so?

Witcher

awec wrote: »

Without repercussion or consequence? All above board and legit to do so?

Why would there be consequences? It's part of the business function

You'd be looking up hundreds of accounts a day...that's part of what banks do..there's no pie in the sky 'permission' systems, nobody who works in a bank gives two sh1ts about searching up accounts but it could be done.

awec

Witcher wrote: »

Why would there be consequences? It's part of the business function

You'd be looking up hundreds of accounts a day...that's part of what banks do..there's no pie in the sky 'permission' systems, nobody who works in a bank gives two sh1ts about searching up accounts but it could be done.

Randomly? Surely you are looking up the accounts of people who apply for mortgages, loans or credit, perhaps have made unusually large cash deposits, or have some other reasonable reason for needing to access their account?

I mean, you are suggesting here that you could randomly look up the account of anyone you wanted, at any time, look at their income, look at what they spend their money on, for no reason whatsoever other than idle curiosity, and you could do this openly and without any consequence?

Witcher

awec wrote: »

Randomly? Surely you are looking up the accounts of people who apply for mortgages, or have some other legitimate reason where looking through accounts is part of the process?

I mean, you are suggesting here that you could randomly look up the account of anyone you wanted, at any time, look at their income, look at what they spend their money on, for no reason whatsoever other than idle curiosity, and you could do this openly and without any consequence?

Yes, you could.

awec

Witcher wrote: »

Yes, you could.

That is interesting. Do banks employ many people to randomly go through accounts for no reason whatsoever?

guyfawkes5

Regarding OP:

You agreed to have the property as your primary residence in your mortgage contract so the bank are well within their rights to move you onto a BTL rate.

Depending on the size of your mortgage, this could end up costing you 100s of Euros every month.

If I were you, I would immediately contact the bank to see if there's some way you could stay on your current rate such as cancelling your rental plans and moving back in.

Alrigghtythen

XsApollo wrote: »

I presume the insurances are void also if you are letting instead of living in it?

Yes it will be

BoyLaw937

awec wrote: »

What part?

You think Joe Bloggs in the bank can open up Witcher's accounts whenever he wants and see what you're spending your money on?

They can.

Source: I did

LawBoy2018

.

awec

BoyLaw937 wrote: »

They can.

Source: I did

Fair enough, I stand corrected.

It seems mad in this privacy crazy world that random bank employees are allowed/encouraged to browse random accounts without reason or cause.

guyfawkes5

awec wrote: »

That is interesting. Do banks employ many people to randomly go through accounts for no reason whatsoever?

From having worked at a fintech R&D department, security like this is accomplished by automation - from arbitrary transfer rules like transactions above a certain amount or transfers from networks with a history of fraud, to AI-driven stuff in the more cutting edge startups.

Having people spot check accounts, even at random, wouldn't be scalable and I suspect not strictly legal.

*Edit: seems the conversation is more about checking accounts in a targeted fashion and not at scale. The above is the larger scale security.

TuringBot47

eam77 wrote: »

I have a property that I have a mortgage on and we recently decided to rent it out. Our mortgage lender is saying we have to change from residential mortgage to a buy to let mortgage.


Are we going to be better off or worse off by changing?

Worse off, different rates.


Also, if you still get mortgage interest relief at source then that will be immediately stopped.

Landlords claim interest relief to offset their tax bill, when they legally declare the rental income.

awec

guyfawkes5 wrote: »

From having worked at a fintech R&D department, security like this is accomplished by automation - from arbitrary transfer rules like transactions above a certain amount or transfers from networks with a history of fraud, to AI-driven stuff in the more cutting edge startups.

Having people spot check accounts, even at random, wouldn't be scalable and I suspect not strictly legal.

*Edit: seems the conversation is more about checking accounts in a targeted fashion and not at scale. The above is the larger scale security.

This is what I suspected too, but it appears from this thread that bank employees can look through your account at any time for no reason at all and that there are no policies or procedures against this.

I was aware of the automated flags that can happen for certain transactions, but not this.

Truth be told, I am still somewhat skeptical.

tvjunki

I think I while back the Banks looked at their mortgage book to see what was BTL to see what they could sell off. They also checked what was home mortgage that changed to btl. They just had to go to rtb to find out what properties were registered to be rented out. They could also do a register search and see if you had another property you had a mortgage on.

Check your mortgage contract. Some got a mortgage that were not restricted to home owners only. If you have a lovely tracker they can in some cases request you move to higher btl mortgage.

You can move back in and let them know if is your principal private residence. If you rang them to say you are moving out then all you can do is reverse your decision and the house you have bought rent that out. Work out what is better financially for you.

LawBoy2018

awec wrote: »

This is what I suspected too, but it appears from this thread that bank employees can look through your account for no reason at all and that there are no policies against this.

Why would it be illegal?

Renjit

awec wrote: »

This is what I suspected too, but it appears from this thread that bank employees can look through your account at any time for no reason at all and that there are no policies or procedures against this.

Those with access and authorizations can look at the data. Of course, it may be logged and audited later.

LawBoy2018

Renjit wrote: »

Those with access and authorizations can look at the data. Of course, it may be logged and audited later.

It wouldn't be widely available to all employees, it would depend on which department they work in.

awec

Renjit wrote: »

Those with access and authorizations can look at the data. Of course, it may be logged and audited later.

If the audit showed that Joe Bloggs, who does the mortgage approval stuff at the bank spent his lunchtime looking through his neighbours and mates bank accounts to see what they were spending their money on, would Joe Bloggs be asked to explain himself?

LawBoy2018

awec wrote: »

Why would it be audited later? If the audit showed that Joe Bloggs, who does the mortgage approval stuff at the bank spent his lunchtime looking through his neighbours and mates bank accounts to see what they were spending their money on, would Joe Bloggs be asked to explain himself?

It wouldn't tbh unless 'Joe Bloggs' breached GDPR.

awec

LawBoy2018 wrote: »

It wouldn't tbh unless 'Joe Bloggs' breached GDPR.

Honestly, I find this absolutely mind blowing (genuinely, not being a smart ass).

I work in tech, and the hoops I have to jump through to access any customer data is insane, even if I looked up customers names without proper cause I'd be in serious ****. That bank employees have free reign here is amazing.

Even the ones that have access to this data, I would expect they couldn't just do whatever they want. I stand humbly corrected!

antimatterx

awec wrote: »

Honestly, I find this absolutely mind blowing (genuinely, not being a smart ass).

I work in tech, and the hoops I have to jump through to access any customer data is insane, even if I looked up customers names without proper cause I'd be in serious ****. That bank employees have free reign here is amazing.

Even the ones that have access to this data, I would expect they couldn't just do whatever they want. I stand humbly corrected!

Same, I work in tech also and they are privacy mad (rightly so). If this is true, I think is going to be the scandal coming out of the banking sector. It's going to be worse than the tracker mortgage scandal.

LawBoy2018

awec wrote: »

Honestly, I find this absolutely mind blowing (genuinely, not being a smart ass).

I work in tech, and the hoops I have to jump through to access any customer data is insane, even if I looked up customers names without proper cause I'd be in serious ****. That bank employees have free reign here is amazing.

Even the ones that have access to this data, I would expect they couldn't just do whatever they want. I stand humbly corrected!

If ever you find yourself locked out of your bank accont, one of the first few things you'll be asked to do to verify your identity will be to cite your most recent bank transactions.

Similar practices would be standard in most banks I'd imagine, along with law firms, financial services providers, etc.

awec

LawBoy2018 wrote: »

If ever you find yourself locked out of your bank accont, one of the first few things you'll be asked to do to verify your identity will be to cite your most recent bank transactions.

Similar practices would be standard in most banks I'd imagine, along with law firms, financial services providers, etc.

Ah yea, I've done this, but that sort of access is for a specific reason and has cause, which is not the sort of access I was referring to.

I guess to tie it back to the OP somewhat, and to get back on track a bit, I am surprised that it seems banks do randomly browse through accounts whenever they feel like it to try find an account with rental income for example, and then try and tie that account bank to a residential mortgage holder.

LawBoy2018

awec wrote: »

Ah yea, I've done this, but that sort of access is for a specific reason and has cause, which is not the sort of access I was referring to.

I guess to tie it back to the OP somewhat, and to get back on track a bit, I am surprised that it seems banks do randomly browse through accounts whenever they feel like it to try find an account with rental income for example, and then try and tie that account bank to a residential mortgage holder.

That's incorrect, the OP told us that he himself slipped up and informed the bank re his current situation. A bank would never authorise employees to randomly browse through customer's accounts in the hopes of catching them out. What we're saying is that there would be very little preventing an employee from being nosey and browsing through accounts as they pleased. However, this would be quite rare in my experience.

guyfawkes5

Anyway, OP seems to be in a bit of a hole and almost certainly can't ignore this.

Can you get out of the rental arrangement? The extra interest on a BTL mortgage might wipe out whatever profit you're making there anyway.

cruizer101

LTV might be an issue also, if you were first time buyer you only need 10% deposit, for BTl it is higher, at least 20% if not significantly more.
So depending on how much of mortgage is paid off you may not even be able to get a large enough mortgage.

perfectkama

Why you where looking into a mortgage break tenants stopped paying or is it not breaking even?

BoyLaw937

awec wrote: »

Fair enough, I stand corrected.

It seems mad in this privacy crazy world that random bank employees are allowed/encouraged to browse random accounts without reason or cause.

Its not encouraged and I am not even sure that would contravene Data Protection laws as the bank is the Data Controller and it would be covered within the privacy statement upon becoming a customer. Bear in mind now that no information is being disclosed to any third parties. Someone with experience in Data Protection could weigh in here.

The Banks also do yearly reviews of an individuals accounts depending on their exposure. There is a seperation of the type of review done depending on the amount of exposure the customer has, I cannot remember what the amount was, I think it could be like 50k, if your below the review is not as detailed but it still contains info about your loans and exposure. If its above it contains a detailed profile of everything you have ever done.

Also, within the detailed reviews the banks have information of exposure held with other banks, I am not sure how this is gotten.

un5byh7sqpd2x0

LawBoy2018 wrote: »

It wouldn't tbh unless 'Joe Bloggs' breached GDPR.

The very fact that Joe Bloggs is looking through his mate's accounts willy nilly is a breach of GDPR, and the Data Protection regime that preceded it.

Here's an example of something similar: https://www.independent.ie/irish-news/audit-finds-celebrity-data-breaches-29281224.html

Graham

Mod Note

OP told the bank he was letting the property. GDPR is not relevant/helpful here.

3DataModem

<SNIP>

GreeBo

JustAThought wrote: »

How did your bank know you are letting it out?

Of course if you decide not to let it out, will they continue to demand that you change mortgage product?

Best advice I got before I was lucky enoug to be able to take out a mortgage was never to have my active ‘money’ account with the same bank as my mortgage as it would allow them to see everything that was going on financially in my life. It was extremely good advice, whomever told me did me a huge favour.

When getting a mortgage the bank will ask for statements from all your accounts with any banks, they already have access to the accounts you hold with that bank.

"seeing everything that was going on financially in your life" is exactly what they are trying to do!:rolleyes:

Xterminator

TLDR summary.

OP signs contract.

Op breaks contract terms.

Bank demands he become compliant.

OP is unhappy that bank found out.

Most people comment on banks conduct, not so much OPs conduct.

I thought you could claim back 100% of the interest via Mortgage Interest Relief?

So even if banks increase your monthly payment right now, you just put it against your tax return at the end of the year? It might mess up cashflow for now but it evens out at the end as your tax bills will be lower.

awec

kian163 wrote: »

I thought you could claim back 100% of the interest via Mortgage Interest Relief?

So even if banks increase your monthly payment right now, you just put it against your tax return at the end of the year? It might mess up cashflow for now but it evens out at the end as your tax bills will be lower.

Can't claim back mortgage interest relief on any mortgage taken out after 2012. It stops for all mortgages next year.

Geuze

awec wrote: »

Can't claim back mortgage interest relief on any mortgage taken out after 2012. It stops for all mortgages next year.

Don't confuse TRS tax relief for owner-occupiers with landlords being able to deduct mortgage interest from gross rental income.

Two different tax reliefs, both based on interest paid.