Should I sell my rental apartment or keep it? | Buy to rent
Q In 2006, I bought an apartment on the south coast. Looking back, I had no idea what I was doing and was caught in an unrealistic bubble that burst soon after. I live in rented accommodation in the south and couldn’t really afford to buy anything. But I thought I would get a buy-to-let mortgage and the vacation rental would pay the mortgage and at some point I would own it because I would otherwise never be able to buy in the area where I live because my job has always been independent unstable.
I was turned down for a buy-to-let mortgage (they said there was no guarantee it would leave for enough weeks, but I knew it would be because of the beachfront location sea), so I applied for a home mortgage, planning to live there in a few days. years old and thinking it was no big deal. But my situation changed and I did not move.
Now, 15 years later, the lease has been successful, covering interest-only payments and management costs. But that hardly reduced most of the mortgage I probably paid way beyond the odds.
My question is should I keep it in the hope that there will be more money in it in 10 years so that I have more for retirement? My other main concern is that the apartment was registered as a business and I’m paying taxes on it, but the mortgage company thinks I live there. I’m afraid if I do anything I’ll rock the boat and report the problem, I’ve read that the mortgage company can demand full payment (I owe £190,000). If I’m selling, does my mortgage company know anything other than me selling? If I keep it and try to get a new mortgage from another lender, will it be flagged that I live elsewhere?
If I sell, I won’t buy anything else, I’ll reduce my low income and have a better life for a few years. It won’t be enough in old age, but at least I can enjoy a few years that I may or may not live beyond. I would appreciate any reality check you can give me.
A I’m not surprised you were initially refused a rental mortgage, as this is the case for properties rented to permanent tenants rather than vacationers. I’m flabbergasted that you were given a residential mortgage since they already knew you weren’t planning to live there.
I’m also not surprised that most of the mortgage hasn’t gone down, because you clearly have an interest-only mortgage where, unlike a repayment mortgage, none of the monthly mortgage payment is used to repay the original mortgage. . And you’re right to fear that if you let your mortgage lender slip that you don’t live in the property, they may force you to pay off the entire mortgage because you’ve breached the terms of the loan.
If you don’t tell your current lender and sell the apartment, the lender won’t necessarily know anything other than what you’re selling and will clear the mortgage. If you try to get a new mortgage from a new lender, it will of course be flagged that you live elsewhere, as you are expected to tell the truth about any mortgage application.
In the (much) longer version of your question, you ask if you could try a rental mortgage but for the reasons already given, the answer is no. It may be worth contacting a lender that specializes in vacation rental loans, but you may find it too expensive for your current mortgage.
The reality is that even if it is by accident, you are actually committing mortgage fraud which is a criminal offence. I suggest you find a mortgage fraud lawyer for advice on how to put things right.