Guide to Renting Out Your Home

If you have a mortgage on your house, you may be asking “can I start renting out my house?” to generate extra income. Depending on how you approach renting out your home it can be straightforward painless process, or it can be a nightmarish situation.

Renting out a property with a mortgage is subject to terms and conditions in your mortgage contract and this guide will explain what you need to do to rent out your home without problems.

Let’s explore further with our guide to renting out your home.

How Do I Start Renting Out My House?

If you do not have a mortgage on your property, you need read no further as you are at liberty to use your property as you see fit.

But if you have a mortgage there are rules that lenders insist on before you rent out your property.

Not all lenders allow you to rent out your property with a residential mortgage. Some lenders allow you to get consent from them in certain circumstances to rent your property and keep your residential mortgage.

This is known as consent to let.

Consent To Let

Before getting optimistic about obtaining consent to let, you should be aware even lenders that allow you to ask for it, are loathe to actually provide consent.

In the first instance you should check your mortgage contract and ascertain your specific lender’s attitude to renting out your property.

If you cannot find the information, contact a mortgage broker to help identify your lender’s rules.

If your lender has a consent to let option, you should ask your broker to contact the lender and find out if it is possible.

In most cases, a lender will reject a consent to let application. In rare cases, where there is only a small mortgage remaining or your mortgage term is coming to an end, they may allow you to keep the residential mortgage and rent out the house.

When Can I Start Renting Out My House?

Once you’ve got the go-ahead, the next big question is; when can I start renting out my house? If you are still residing in the property and letting out a room, you will not necessarily need consent to let, and most lenders allow you to take in a lodger.

Whether lodgers are permitted will be outlined in your mortgage contract.

If you obtain consent to let, you are free to being finding a tenant.

If you are refused consent to let, the journey is not over and if you are set on renting your property out you will need to switch to a buy to let mortgage or let to buy mortgage.

Your mortgage broker will advise which is best for your circumstances and your personal goals around overall ownership of the house.

How Much Money Can I Make Renting Out My House?

Your rental income will depend on a myriad of factors.

The type of property, location and access to amenities are all primary factors, however you will find other aspects impact your total rent.

For example, is the décor up to date and are all fixtures and fittings operational?

When asking “how much money can I make renting out my house,” it is important to remember a tenant will want to make your property their home. Tenants also have the right to peaceful enjoyment, so you will have little say over how they decorate or use your house.

What Happens If You Get Caught Renting Out Your House?

If you fail to get consent to let and do not switch to a buy to let or let to buy mortgage, you cannot rent out your property.

By proceeding to rent out your property you will be in breach of your residential mortgage contract.

What does such a breach mean?

Well, the short answer to “what happens if you get caught renting your house” is this: quite a lot. A lender has a range of options available to them in this circumstance. First, they are well within their rights to enforce the contract by taking you to court and obtaining a court order. Such a court order can compel you to remedy the situation at your own cost.

Bear in mind, tenants are difficult to evict now the rental reforms have come into place, you may well find yourself in financial hardship trying to negotiate with tenants to remove them and moving back into your property to comply with the court order.

Breaching Court Orders and Repossession

It is common in these circumstances for court orders to be breached deliberately, predominantly due to the above difficulties. In which case the mortgage lender is able to seek repossession.

Once a property is repossessed a lender only cares about making as much money as possible to offset their losses. Repossessed properties often end up in property auctions and sell for far below market value. If you had some equity built up, you may find once the property is auctioned and the lender has recouped their cost, there is no money left for you.

A lender is under no obligation to seek a court order before initiating repossession proceedings. If they believe repossession is the only way they can mitigate losses, they will absolutely pursue this immediately.

With the possibility of significant financial loss to yourself and little recourse because you have breached your mortgage contract, it is best to avoid the situation altogether and not try to rent out your property without consent or the proper mortgage.

Can I Rent Out My House While Living Abroad?

If you are planning on taking work overseas or living abroad for a period of time out of each year, often your mortgage contract will outline what you should do in this circumstance.

If it is going to be a prolonged period of time you are away from the country (normally 3-6 months or more) you will likely need consent to let from your lender.

When you’re considering the idea of “renting my house while living abroad”, a lender may be more amenable to a consent to let as it is a greater risk to them to have a vacant property on their books than a tenanted property. However, each lender views moving overseas differently, and you should not bank on being able to rent out your home without first checking with your mortgage broker.

Speak to a Specialist Adviser

When we take a mortgage, it can sometimes feel like the property is entirely ours to do as we wish. Where a mortgage lender is involved, there will be terms and conditions and unfortunately, they will have some say in how you manage your property.

So, before you ponder “when can I start renting out my house,” you need to find out if it’s even possible.

For the most part with a residential mortgage, lenders are hands-off, preferring you to live in your house in peace and happily collecting the mortgage payment each month. Breaching that mortgage contract is a different matter and lenders pay particular attention to any suspected breach.

You should always consult with a mortgage broker whenever you make a material change to the property’s usage. Even operating a business from home can be problematic for lenders.

Boon Brokers is a Whole of Market Mortgage, Insurance and Equity Release Broker. Boon Brokers provides fee FREE mortgage advice.

If you want a definitive answer to the question “how do I start renting out my house.” contact Boon Brokers to discuss renting out your property today.