Increasingly, people are letting out their own property because they can't sell it for a price they are happy with. When they do this, they have to decide if they are going to tell their mortgage company what they are up to!
Strictly speaking they should - there's likely to be a clause in their mortgage agreement that says they should. In reality I suspect a fair number of landlords don't, and I've never known anyone get 'caught' unless the mortgage isn't paid - and in that case the owner is in trouble anyway. However if you do tell your mortgage company, you need to understand that there could be financial consequences:
- Some mortgage companies will say yes, get on with it - great if that's you!
- Some mortgage companies will simply say no, you can't do it. A friend of mine has had his property sat empty for 18 months now because he moved in with his partner, can't afford to sell it, and his mortgage company refused permission to let.
- Some mortgage companies will allow it, but will make an administration charge - on a property I let out, my mortgage company charges me £300 for the first year, and £200 per year thereafter for 'permission to let'.
- Some mortgage companies will insist you move onto a different product, which may add to the interest rate you pay and cost you more on a monthly basis.
This subject is covered in an independent article - see http://bit.ly/hJFTcE.
