What happens to your mortgage if you decide to let out your home for several years whilst you work abroad? This is the question Darren Polson is tackling in this week’s Ask the Expert feature
The Question
My husband and I own a four-bedroom house which we currently live in with our two children. From August we are going to be moving to Singapore for two years and during this time we will rent out our house to tenants. The rental market is strong in our area, and we are assured we’ll get a good price and no gaps.
We need some advice about our mortgage, though. Should we stick with our current residential mortgage, or will we need to switch it to a different product because we are now landlords? We are two years into a five-year deal so we will be hit by early repayment charges if we switch to a buy-to-let mortgage. What do people in this situation usually do?
Darren’s Answer
Exciting times ahead for you with your move to Singapore!
There are two main options available:
-
Transfer your current mortgage to a Consent to Let (CTL) product
This involves your current lender effectively giving you permission to rent out your property. In most cases, the property must be rented using an acceptable tenancy agreement, such as an assured shorthold tenancy.
The challenge given your circumstances is that many lenders will only permit Consent to Let for a maximum of 12 months. You must also notify your building and contents insurer as this may alter the cover.
-
Remortgage to a buy-to-let (BTL) product
Based on your mortgage being until 2026, you will need to check the Early Repayment Charge applicable, but this might be the only option for the two-year period.
There are many factors to this as you will not have a residential property in the background or have been a landlord before, which will limit the lenders available. In addition, the application process is different for buy-to-let and the way lenders assess cases differs.
Please note, many lenders will use the rental yield from the property to determine the maximum amount affordable, and often this doesn’t consider your salary or personal outgoings.
Both the options I’ve outlined above will be subject to the lender’s criteria and based on your circumstances.
It’s well worth speaking to a mortgage broker who specialises in buy-to-let mortgages, they’ll help guide you through the process.
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for What Mortgage for over two years and is now here to answer YOUR questions.
If you have a question for Darren please email kate.saines@emap.com or leave a message in the comments below.
