Consent to Let
All about Consent to Let Mortgages and advice for when you have Consent to Let refused.
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What is Consent to Let?
Consent to Let is where you ask for approval from your Mortgage Lender to rent out your property.
This will usually be required when you are looking to rent out your home in which you have a residential Mortgage secured on the property.
Residential Mortgages do not permit you to rent out your property. And if you do so without Consent to Let from your Mortgage Lender, you will usually be in breach of your Mortgage terms and conditions.
At the very least, this can sour the relationship between you and the Mortgage Lender.
How do I get Consent to Let
You will need to contact your Lender prior to renting out the property and usually complete an application.
The Lender will then assess the application and decide whether to approve this.
Providing you meet the Lenders Criteria, you will usually be accepted.
However, you will usually have to pay a fee and/or a higher interest rate once the lender has given consent.
You will then usually need to reapply each year for Consent to Let.
Consent to Let Refused
There are a number of scenarios which could see your Consent to Let refused.
Arrears: If you are in arrears or have missed payments in the past. At the very least, arrears will need to be cleared before Consent to Let will be considered.
Equity: If you do not have enough equity in the property. Most Buy to Let Mortgage have a minimum loan to value requirement of 75%.
So if you have less than 25% equity/deposit in your property, then it is likely Consent to Let will be refused.
Income: The Lender may require you to earn a minimum amount each year.
Time with Lender: You will usually be required to have been with the lender for a minimum length of time. Usually 6-12 months.
What is the difference between Consent to Let and Buy to Let?
The main difference is Consent to Let is obtaining permission from your existing Mortgage Lender to rent out your home which has a residential Mortgage secured against it.
A Buy to Let Mortgage is where you take out a specific Mortgage with a new Buy to Let Lender on a property you intend to rent out.
Advantages of Consent to Let
The main advantage of Consent to Let is, it is a quick and less stressful way to rent out your property if time isn’t on your side.
For example, if you need to complete on the sale of another property quickly, to avoid breaking the chain.
Getting Consent from your existing Lender, is generally quicker than applying for a Buy to Let or Let to Buy Mortgage.
In addition, getting Consent to rent out your property in the above scenario will avoid the possibility of you having to make two monthly Mortgage repayments with no additional income coming in (from the rent).
Disadvantages of Consent to Let
Getting Consent is one thing. Finding tenants for the property is another.
If you can’t rent the property out you may end up paying two monthly Mortgage repayments with no additional income coming in.
The Lender will also usually charge you. As Lenders deem Consent to Let and Buy to Let Mortgages, riskier business.
You will have to pay toward the upkeep of the property and ensure the property meets current regulations before you even rent it out.
For example, you now need annual electrical and gas safety certificates. If the property doesn’t pass these checks, you won’t be able to rent the property, until the work is completed.
You will have the cost of employing a Letting Agent or incur the stress of taking on the responsibility yourself.
Consent to Let is temporary
Most Lenders will require you to apply for Consent to Let on annual basis.
So Consent to Let generally should be seen as a temporary solution.
It is likely that it will be cheaper and provide more flexibility in the long run, for you to obtain a Buy to Let Mortgage when you can.
6 months after gaining Consent to Let is usually a good time to move on to Buy to Let or Let to Buy Mortgage.
This is because it will be easier to obtain a Buy to Let Mortgage after you have rented this out for at least 6 months.
It will show you now at least have some landlords experience, and will also mean you are hopefully able to demonstrate 6 months worth of rental payments.
Halifax Consent to Let
Obtaining Consent to Let from Halifax is possible.
Usually you will be required to have kept up with your repayment on your Mortgage in the past.
Be currently up to date with Repayments.
And have a sufficient amount of equity in the property (difference between your Home’s value and your Mortgage). Usually at least 25%.
Providing the above applies to you, then you should be able to get Halifax’s Consent to Let.
There will usually be a cost payable. Either an annual fee and/or an additional interest rate to pay.
If you do not get Halifax’s Consent. You are at risk of being financially penalised by Halifax.
This can include an additional fee, additional interest rate on top of what you are paying. As well as an additional monthly repayment.
Which Lenders Permit Consent to Let?
Most Lenders will permit Consent to Let.
It is always best to ask for approval, don’t ever rent the property out without the Mortgage Lenders permission, if you have a residential Mortgage.
Not only will you burn bridges with the Lender. They can, and often will charge you if they find out.
As above, this can be a one off charge and/or an additional interest rate charge.
Alternatives to Consent to Let
If you have been refused Consent to Let, there could be other options.
If you are looking to buy a new Residential Mortgage to move into and would like or need to rent out your existing home.
You could take out a Let to Buy Mortgage. This is similar to a Buy to Let Mortgage. But instead of buying to rent out. You are renting out your property to buy.
Some Lenders will also consider you for an ordinary Buy to Let Mortgage, where a Let to Buy Mortgage isn’t applicable.
Speak to a whole of market Mortgage Brokers which can provide you with the specialist Mortgage Advice you need.
If you have had Consent to Let refused or would like some information on your alternative options. Or, anything else Mortgage related, for that matter. get in touch and see how we can help.