Real Estate

Why you could breach your mortgage terms by moving into a flat you own

Question: My partner and I are separating and I would like to move into my old flat, which I let out while we were together. I have a buy-to-let mortgage on the flat and a work colleague says this could be a problem for me.

Why should that be the case if I just carry on paying the mortgage without fail, as I have always done?

Answer: Lenders treat buy-to-let mortgages differently to residential mortgages and have different lending criteria for each.

For example, when considering an application for a buy-to-let mortgage, the expected rental income is taken into account.

In addition, there are likely to be conditions imposed on a buy-to-let mortgage dictating the type of tenants to which the property may be let; for example, it is not usually possible for the property to be let to one of the borrower’s family, while any tenancy should be an assured shorthold tenancy for not more than 12 months, and the borrower is usually specifically prohibited from occupying the property.

Accordingly, if you move into your flat you are likely to be in breach of the terms of your mortgage, which could entitle your lender to call in the loan — that is, ask you to repay it in full.

Contact your lender and explain your predicament. They may raise no objections to you living in the property or you may have to redeem your buy-to-let mortgage and take out a new mortgage, either with your current lender or a new one.

These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.

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If you have a question for Fiona McNulty, email or write to Legal Solutions, Homes & Property, Evening Standard, 2 Derry Street, W8 5EE. Questions cannot be answered individually, but we will try to feature them here.

Fiona McNulty is a solicitor specialising in residential property.


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