Follow this topic Q&A » Mortgages

I am living in a property that I have a buy to let mortgage on - do I tell my mortgage provider or keep quiet?

by vickytaylor 09 September 2009 |

4 comments | Love

Love 0 loves

I have a Birmingham Midshires buy-to-let fixed-rate mortgage on which the fixed term ends in November.

I let the flat out for a year and a half (hence buy-to-let mortgage) but I am living in it again now.

When my fixed term ends, the mortgage goes to 2% above base rate which will be significant saving on the 5.5% I pay now.

My question is: Should I tell my mortgage provider that I am living in the flat and possibly have to change products or just let the rate I pay get lower in November?

I am self-employed so I am conscious that it might be tricky to get a good mortgage deal if I have to change products.

Thanks!

Report

Enjoyed this? Show it some love

Retweet

Comments (4)

Facebook

Twitter

General

Comments (4)

824

MikeGG1 posted
Vicky
You should tell your provider but the question is 'When?'.
You need to talk to a Mortgage Broker, and I am sure that there will be someone from LoveMoney replying here soon. You need to find out whether your income will support your current mortgage and equity level.
If all is OK you should switch to a personal mortgage because they are cheaper. However, you should check the small print of your current deal to see what the penalty charges are. As you only have 2 months to go on your current deal, it probably isn't worth telling them yet.
Please also check exactly what the follow-on rate basis is. I am sure that the base rate mentioned will NOT be BofE but will be the BM or Halifax base rate or Standard Variable Rate. As such, if you are able to switch to a personal mortgage, you should at most pay the SVR, which would mean about a 2& saving on the follow-up rate.
I expect that you will be able to get a personal mortgage on SVR. The question is whether your income and equity level would qualify you for a special deal.
Good luck.
Mike
Posted on 09 September 2009 | Love 1 love Report
49

peepobaby posted
Remember to tell you buildings insurer.
Posted on 09 September 2009 | Love 0 loves Report
19

MortgageGuru posted
Hi Vicky
Firstly and most importantly I agree with Peepobaby in that tell your insurer that the property is now back to being your main residence. This is the first thing to do just in case you ever have to make a claim, the last thing you want is for the Insurer to say they cannot help!
As a broker I would always say it is best to notify the lender and as MikeCG1 said, you may as well wait until your curent deal ends so you are not forced to come out of it ealry and pay a huge ealry repayment charge.
It may worth phoning the lender and actually asking the questions theoretically without giving away any personal info. They are obliged to tell you what their policy is.
The options they should give you once you are out of the current product is either to stay on the variable or they may say you have to arrange another product on a residential basis. In theory they cannot force or should not force you to go onto another product when you are on the standard variable rate and if they do, you should quote the FSA Treating Customers Fairly regulations. The fact is the standard variable rate for the lender is the same irrespective of if the mortgage is on a buy to let basis or a residential basis.
the MortgageGuru( a member of the lovemoney.com financial services team)
Posted on 18 September 2009 | Love 0 loves Report
0

vickytaylor posted
Thank you everyone, that is all good advice. I will get on the phone to my buildings insurer and also ask about the SVR. Thanks again!
Posted on 18 September 2009 | Love 0 loves Report

Post an answer

Something you're dying to ask... or answer?

Get started now

Sign in for a better Q&A

Registered already? Great! You can just sign in to ask and answer questions.

W3C Thank you for using Three Kings