Home-owners who let out their properties for more than three years and who have ordinary residential mortgages face steep hikes in their repayments.
Nationwide will be adding 1.5% to borrowers’ monthly payments, plus a £50 fee when they notify the lender that they are renting out their property.
The new regime kicks in on September 1 for new customers, and December 1 for existing borrowers who have already let out their homes for more than three years.
Nationwide wants to clamp down on property investors who have taken out residential mortgages, which cost much less than buy-to-let mortgages. However, the charges will hit accidental landlords who have been unable to sell and home-owners working abroad.
Nationwide is set to become the first lender to charge such a levy. The announcement comes after Parliament rushed through legislation to protect tenants from immediate eviction where the landlord has an ordinary residential mortgage, whose property is repossessed and where the lender might not even know there were tenants in the house.
Nationwide is also increasing or introducing other charges in September. There will be a £50 fee for switching from capital repayment to interest-only monthly payments. The society is also increasing charges levied on borrowers in arrears.
Accidental landlords to be clobbered by mortgage hike
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Comments
John, you are entitled to your opinions, but there is no getting away from the fact that 1.5% is a very steep hike. Might it not discourage home-owners from informing the lender or even put them off renting the house out at all?
What a load of poppy cock. Accidental landlords clobbered by mortgage hike? Who are you trying to kid. Buy-to-let exists for a reason - not so people can make a fast buck. Renting out your property on a residential mortgage deal and not informing the lender of the change of use invalidates buildings insurance and the like. This is hugely irresponsible and represents more of a threat. This piece shows a real misunderstanding of the mortgage market.
In the nineties this was the norm for lenders to add 1% or more to a mortgage in such circumstances. Once the market became more competitive some lenders stopped charging extra for some reason, with the practice now returning.
Its just an excuse to bump up profits with no real assessment of the actual cost of the additional risk.
With BTL mortgage rates still uncompetitive borrowers may have few other options
Accord also do this. They charged me a £100 fee and additional 1% on my rate.
Nationwide are not the first to apply additional charges in this way. Intelligent Finance charge an extra 0.5% upfront every 6 months for 'consent to let'.