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Telling the bank your renting the property!

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  • 13-02-2011 8:29pm
    #1
    Johnny Bitte
    Registered Users Posts: 1,099 ✭✭✭


    Is there a legal requirement to tell them and if I do they 'll increase the mortgage interest?


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    #2
    mikemac
    Closed Accounts Posts: 19,986 ✭✭✭✭mikemac


    I don't know if there is a legal requirment.
    But revenue will want to know if you're claiming allowances.

    It'll affect your house insurance too


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    #3
    Johnny Bitte
    Registered Users Posts: 1,099 ✭✭✭Johnny Bitte


    feelingstressed wrote: »
    I don't know if there is a legal requirment.
    But revenue will want to know if you're claiming allowances.

    It'll affect your house insurance too

    Thats no bother, as soon as the tenant moves in the TRS will be cancelled and landlord insurance will be bought.

    The only thing I m unsure of is the bank?


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    #4
    Victor
    Registered Users Posts: 78,399 ✭✭✭✭Victor


    Its likely a term in your mortgage contract for you to tell the bank.

    They'll find out anyway when the TRS is changed.


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    #5
    Johnny Bitte
    Registered Users Posts: 1,099 ✭✭✭Johnny Bitte


    Ok, so any idea if they definitely change it and any idea by how much?


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    #6
    irlrobins
    Registered Users Posts: 7,541 ✭✭✭irlrobins


    They might look to move you from an owner occupier mortgage rate to a buy to let one which is typically higher. If you have a tracker rate at present the new rate will be significantly higher. Who is your mortgage with?


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    #7
    ds2011
    Registered Users Posts: 5 ✭ds2011


    Almost all mortgages contain a covenant by the borrower saying that he or she will not divest themselves of their property in any way including sale, lease etc. without the prior consent in writing of the bank.

    Usually the clause says that the bank should not unreasonably refuse to give written consent.

    The theory is that the bank needs to safeguard it's investment and if you are renting the property out then it would be in the banks interest that you achieve a good rent otherwise your ability to repay the loan may be diminished.

    If you breach a covenant (the most common covenant is the covenant to make repayments) then the bank have the right to foreclose on the loan (in theory). If this is the case then the bank can ask you to repay the mortgage or else offer you different terms. You could always go to another bank and refinance but this is very difficult in todays market and you are unlikely to get better than tracker. The operation of this covenant is why in practice banks can take you off tracker.

    I do not know the policy of AIB on this but would be interested to find out. While renting the premises there is a breach of covenant it is very much a minor breach and I don't know how much sympathy the bank would get if this were to go to court.


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    #8
    Johnny Bitte
    Registered Users Posts: 1,099 ✭✭✭Johnny Bitte


    irlrobins wrote: »
    They might look to move you from an owner occupier mortgage rate to a buy to let one which is typically higher. If you have a tracker rate at present the new rate will be significantly higher. Who is your mortgage with?

    With ICS, and on variable.

    Just doing up how much it gonna cost me to rent it and really dont need a mortgage hike as well. Can I put off paying the NPPR and PRTB for a month or two or should they be done the day the tenant moves in?

    On the plus side I just go my first call for a viewing :D

    As of Aug 2010
    Owner Occupier Rates ICS

    Standard Variable Rate = + 0.45%
    Variable LTV rates for new and existing business = + 0.25%
    Fixed rates for new and existing* business = + 0.25%


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    #9
    irlrobins
    Registered Users Posts: 7,541 ✭✭✭irlrobins


    ICS don't show their current rates online. Might be worthwhile giving them a call.

    But taking BOI as an example (since ICS are part of the BOI group)

    Variable rate for owner/occupier (LTV >80%, existing customer) = 3.5%
    Same rate for buy to let = 4.7%


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    #10
    3DataModem
    Registered Users Posts: 3,997 ✭✭✭3DataModem


    I have researched this extensively OP.

    I have never heard of ANYONE getting their interest upped after moving out and reting their home.

    Lots of theory, no examples.

    I myself have done this 3 times... all 3 times interest rate not changed.


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    #11
    [Deleted User]
    Posts: 23,339 ✭✭✭✭ [Deleted User]


    The_Goose135 wrote: »
    Can I put off paying the NPPR and PRTB for a month or two or should they be done the day the tenant moves in?

    I don't know about the NPPR but the PRTB will double the charge is you pay it outside of 30 days of the tenancy commencement date.

    One more factor that may or may not applicable to yourself, stamp duty.


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    #12
    Juwwi
    Registered Users Posts: 4,250 ✭✭✭Juwwi


    3DataModem wrote: »
    I have researched this extensively OP.

    I have never heard of ANYONE getting their interest upped after moving out and reting their home.

    Lots of theory, no examples.

    I myself have done this 3 times... all 3 times interest rate not changed.

    Hi did uou ever do it with a tracker mortgauge and also
    do you know if the bank does find out say a few years later would you be liable to pay them any owed interest?
    thats whats l'd be worried about.


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    #13
    [Deleted User]
    Posts: 23,339 ✭✭✭✭ [Deleted User]


    robbie1977 wrote: »
    Hi did uou ever do it with a tracker mortgauge and also
    do you know if the bank does find out say a few years later would you be liable to pay them any owed interest?
    thats whats l'd be worried about.

    The bank will find out as soon as you no longer claim tax relief at source, as a landlord you cannot claim this. I doubt they will allow you remain on a tracker when you are renting it out.


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    #14
    troops
    Registered Users Posts: 119 ✭✭troops


    am on a tracker and no change with bank after renting it out.
    you need to tell revenue who will inform your lender to stop your trs.
    afaik trs is calculated on a yearly basis by revenue so if you cancel now you will still get it to the end of 2011.


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    #15
    3DataModem
    Registered Users Posts: 3,997 ✭✭✭3DataModem


    robbie1977 wrote: »
    Hi did uou ever do it with a tracker mortgauge and also
    do you know if the bank does find out say a few years later would you be liable to pay them any owed interest?
    thats whats l'd be worried about.

    Yes I have done it with a tracker... last may. They just sent my yearly statement to my Isle of Man address... no queriea, no issues.


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    #16
    3DataModem
    Registered Users Posts: 3,997 ✭✭✭3DataModem


    RoverJames wrote: »
    I doubt they will allow you remain on a tracker when you are renting it out.

    I have yet to hear of ANYONE losing a tracker as a result of this.


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    #17
    [Deleted User]
    Posts: 23,339 ✭✭✭✭ [Deleted User]


    3DataModem wrote: »
    I have yet to hear of ANYONE losing a tracker as a result of this.

    Well considering that trackers cost the banks a good lash of cash and that if you aren't an owner occupier you are not entitled to be on one I reckon the banks may well start looking at it if they haven't already. I know for a fact someone on a variable rate who rented out their home due to a change in job was told by their bank manager that they should be switched to a buy to let rate but that it was no problem. That was before the sh1t hit the banking fan.


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    #18
    troops
    Registered Users Posts: 119 ✭✭troops


    RoverJames wrote: »
    if you aren't an owner occupier you are not entitled to be on one
    where does it say this exactly?


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    #19
    [Deleted User]
    Posts: 23,339 ✭✭✭✭ [Deleted User]


    troops wrote: »
    where does it say this exactly?

    Contact your bank, to be honest I'm not overly bothered either way :)


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    #20
    Johnny Bitte
    Registered Users Posts: 1,099 ✭✭✭Johnny Bitte


    Soooooo anyway, it looks like either 1. the rate wont change at all or 2. it will go up slightly!

    Thanks everyone.


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    #21
    Andy013
    Registered Users Posts: 13 ✭Andy013


    Hi Goose135.
    Just Wondering How you got on ? Did the bank take you off the tracker ? Im thinking of doing the same thing,renting out house. Pending on if i can stay on the tracker or not. Thanks


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    #22
    DrPhilG
    Registered Users Posts: 12,328 ✭✭✭✭DrPhilG


    Andy013 wrote: »
    Hi Goose135.
    Just Wondering How you got on ? Did the bank take you off the tracker ? Im thinking of doing the same thing,renting out house. Pending on if i can stay on the tracker or not. Thanks

    +1!


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    #23
    troops
    Registered Users Posts: 119 ✭✭troops


    DrPhilG wrote: »
    +1!
    no bank haven't taken back tracker..go for it


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    #24
    Zamboni
    Registered Users Posts: 4,305 ✭✭✭Zamboni


    Anyone who is going to let their house out that has a tracker with a state owned bank should be kicked off it.
    Why should the Irish taxpayer be subsidising your new business?


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    #25
    eobphotography
    Closed Accounts Posts: 56 ✭✭eobphotography


    Zamboni wrote: »
    Anyone who is going to let their house out that has a tracker with a state owned bank should be kicked off it.
    Why should the Irish taxpayer be subsidising your new business?

    renting out your house because you cannot sell it, moving to rental accomodation which is equal in cost to the mortgage because a job requires us to move, loosing TRS, paying higher insurance and all the other costs incurred by being a landlord, is hardly a lucrative business, its the only way some of us can live these days, otherwise we are stuck living in houses we cant sell unable to move in any direction with life. Why should we be penalised more for merely living?


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    #26
    3DataModem
    Registered Users Posts: 3,997 ✭✭✭3DataModem


    Zamboni wrote: »
    Anyone who is going to let their house out that has a tracker with a state owned bank should be kicked off it.
    Why should the Irish taxpayer be subsidising your new business?

    I moved abroad to get work. As the taxpayer's representative you can either leave me the tracker, or take the whole lump of neg equity.


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