Equity Home Loans - mortgage for house rental...?

mortgage for house rental...?

at the moment we are 2yrs into a 3yr interest only mortgage on our first home. Ideally we would like to move but there is a large penalty if we move before the end of the 3yr period. an option we have considered anyway is to rent out our current home to retain it as an investment and just to use the rental income to cover a majority of the mortgage. does anyone know if we will need to change our mortgage before renting it out (ie would we need to change to a buy to let mortgage) or would we be able to rent it out on the current mortgage???? If we cant rent wihtout changing mortgages then it would enable us to move quicker wihtout having to pay the penalty. Any ideas??? Thanks :) we cant remortgage as then we would have to pay the early repayment charge which si something ridiculous like £25,000!! We have had the house valued 6months or so ago and it has already increased in value by £20,000+ since purchase 18months previous (only bought for £150,000!) so no worries about losing value!! we are looking to retain the house for long term and also are not worried about rental covering mortgage repayments as we can afford the excess as the excess we would pay to cover mortgage compared to the increase in value works in our favour.

Public Comments

another thing you have to worry about is if the value of the house after 3 yrs has goner down and you have have to pay money just to get out of the mortgage, plus sales commissions
Cheryl, if I understand your question correctly, you have an interest only mortgage? It may be in your best interest to refinance it into a fixed rate, then rent it out. In your current state, you could be losing any and all equity to cover the mortgage balance due to the state of the real estate industry right now. I'd consider refiancing as soon as you can. Just don't tell them you are considering renting it out. da As for renting it out, that shouldn't be a problem, except finding a renter that will have good credit and no criminal background... You were planning to do a background investigation weren't you? Must do!
Your best bet would be to stay in the property for the 3 years. The reasoning behind this is Capital Gains for you (primary residence for at least two yrs and owning for 5 yrs). Also you would have to have the very best renters to make sure your mortgage payments could be covered. You could also just lease option which would give you one to two years for the buyers to decide if they want to buy it at the end of the contract while paying you rent, and you would still be able to get the Capital Gains as long as it was your primary residence for two years. I would do the lease option.
I have rented out several houses without informing the mortgage company what they dont know doesn't hurt them and their making so much money i dont think they care all that much.
You need to consider the tax implications of this.
Check out http://www.mortgagefigure.com lots of information about mortgages, refiniancing, consolidation, bad credit mortgages and more.
Your mortgage papers will have a clause included as to whether you can or not rent the property