When a fixed rate mortgage reverts to standard rate

[King Herald]

Our 4.9% fixed rate mortgage with C&G reverts back to standard rate sometime soon, however, a couple of years ago we decided to rent the house out and move overseas.

What will be the likely scenario? Will we have to sign up with some special mortgage at a high interest rate, or should it just drop to the usual 1% above BOE rate as was planned originally?

It is/was not a BTL house, as we lived in it for four years, so I begrudge the bank calling it 'Buy To Let'.

I could call up C&G and ask, but I'd like to be armed with a little knowledge before I do that.

The mortgage people are aware it is rented out, letter of permission was obtained, all is above board.

[Sarnie]

It'll revert to the SVR.

Not sure why you'd begrudge calling it a BTL; that's what it is now.


EDIT: Actually I've had a client in a similar situation a few months ago, he had Consent To Lease, and when he reverted to the SVR they increased the rate by 4% in line with their BTL products, on the basis that the original agreement was now no longer applicable.

Edited by Sarnie on Sunday 18th November 21:29

[King Herald]

Sarnie said:

It'll revert to the SVR.
Not sure why you'd begrudge calling it a BTL; that's what it is now.

Well we didn't buy it to let it. I really despise these trending words, words such as 'trending'.

BTLIBLO: Bought To live In But Then Let?

Sarnie said:

EDIT: Actually I've had a client in a similar situation a few months ago, he had Consent To Lease, and when he reverted to the SVR they increased the rate by 4% in line with their BTL products, on the basis that the original agreement was now no longer applicable.

I suppose C&G could say the same for us, usage changed to the original contract is invalid, But then they'd have to lower our rate. Not many people are paying 4.9% on a mortgage.

[Sarnie]

King Herald said:

I suppose C&G could say the same for us, usage changed to the original contract is invalid, But then they'd have to lower our rate. Not many people are paying 4.9% on a mortgage.

You may not have bought it to let it, you bought it to live in, but now your not living in it and letting it. Therefore it's a BTL.

It's not a residential property anymore; its a BTL. You might not like the wording but thats what it is. You can't really grumble if the lender raises your rate after you've altered the usage of the property?

[King Herald]

Sarnie said:

You may not have bought it to let it, you bought it to live in, but now your not living in it and letting it. Therefore it's a BTL.

It's not a residential property anymore; its a BTL. You might not like the wording but thats what it is. You can't really grumble if the lender raises your rate after you've altered the usage of the property?

I notice there was not a word about interest rates when we applied for permission to rent it out. You'd think that would be the time they'd try and slip us a fat one and hike it up. Unless the BTL rate was actually lower than 4.9 at that time?

I do hope they don't want to charge some lofty 'arrangement fee' when our 7 years is up and things change.

[Sarnie]

It's unlikely they would or could charge you a fee, unless they were insisting on you moving on to a BTL product. Which, if you're going to revert to a rate of 1.50%, could be fairly likely.

Whats the LTV? Looking at their current BTL products the highest LTV they do is 75%;

http://www.cheltglos.co.uk/mortgages/buy-to-let/

Consent To Lease is usually only granted in extenuating circumstances such if the property is in negative equity, high ERC's or perhaps a sudden change of relocation leaving no time to sell etc. Consent to Lease is not a permanent arrangement. I would be expecting them to insist on a swap to a BTL product at some point in the near future especially now your ERC's are about to expire and definetly if you are below 75% LTV.

[Sarnie]

It's unlikely they would or could charge you a fee, unless they were insisting on you moving on to a BTL product. Which, if you're going to revert to a rate of 1.50%, could be fairly likely.

Whats the LTV? Looking at their current BTL products the highest LTV they do is 75%;

http://www.cheltglos.co.uk/mortgages/buy-to-let/

Consent To Lease is usually only granted in extenuating circumstances such if the property is in negative equity, high ERC's or perhaps a sudden change of relocation leaving no time to sell etc. Consent to Lease is not a permanent arrangement. I would be expecting them to insist on a swap to a BTL product at some point in the near future especially now your ERC's are about to expire and definetly if you are below 75% LTV.

[King Herald]

LTV is 26% according to the calculator I found

http://www.creditmarket.co.uk/loan-to-value-ltv-ca...

When we got the letter off them stating we could rent it out they told us we needn't apply for another, this one was permanent. I know sometimes you have to re-apply every year.

I really ought to start shovelling more money into the mortgage, try to get it paid off. I was overpaying £200 a month for a while, but then we built another house and money has been a bit tight ever since.