What are consent to let mortgages?
What are consent to let mortgages?
Consent to let mortgage is a formal, written agreement between you and your mortgage lender which gives you permission to rent out your home for a short period of time. It is the only legal way that you can rent out your house on a residential mortgage. It is essential to get your mortgage lender’s permission before you consider letting out your home as you could be in breach of your mortgage contract which may be considered as mortgage fraud. Your mortgage lender could then demand that you repay the entire mortgage immediately and may even repossess your home.
When might consent to let mortgages be refused?
When you apply for consent to let, it’s not guaranteed that permission will be granted. There are usually a few conditions that you’ll need to meet. For example, your mortgage lender might insist on the following:
- You must tell your home insurance provider about the new mortgage arrangement as it could affect your cover.
- You can only rent out your property on one tenancy agreement.
- Your mortgage payments need to be up to date and paid on time, with no arrears.
- You must agree to rent out your property on an assured shorthold tenancy.
- You can’t apply to borrow more on the property while it’s being rented out.
When might consent to let mortgages be accepted?
There are a few reasons why consent to let might be accepted. Usually, lenders are happy to help if:
- You’re moving in with a partner and want to rent out your existing home while waiting to sell it.
- You need to temporarily move for work or have accepted a short-term work contract overseas.
- You’re moving in with a relative who needs care.
- You’re going travelling for a few months.
- You’re a member of the Armed Forces and have a tour of duty in another country.
Do I have to pay tax on my rental income if I have a consent to let mortgage?
Regardless as to whether you have a buy to let mortgage or a consent to let mortgage, you will still be required to declare this rental income to HMRC via a self-assessment. Although please note you can offset allowable expenses to reduce your profit or claim the £1,000 tax free allowance.
If you have any questions or require any advice specific to your circumstances, please contact us at PJCO. You can book a free discovery call by clicking the link below!
Please get in touch on 01273 441187 or book a discovery call with one of our expert accountants.
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