Possibilities of renting a property which has a tracker mortgage.

[Mongola]

Hi guys,

I do have 2 questions and I do hope you can help shedding some light:

My partner and I are working at putting ourselves in a financial position where we will be able to buy a house together in the next 2 to 3 years.
We live in a 2 bed apartment and my partner owns it. He is on a tracker mortgage.

We are looking at:

Buying a house jointly while renting out this apartment. Would this affect his tracker mortgage? We will of course check with the bank when the time comes but this question came up when we were talking about this and we would love to know how feasible our plan is. Can you rent a property that has a tracker mortgage on? or do you have to live in with such mortgage?

Also, while he is an owner, I am not. At present I am a first time buyer but we will be married by next summer so what would our status be?
How do we buy jointly with one being a first time buyer and one who is not?

Thanks

 

[Macstuff]

In relation to your tracker and losing it if you rent the property, that depends on your mortgage contract. I have a tracker with NIB and it clearly states that I will lose it if I rent the property. Some banks didn't put such conditions in their contracts, some (like mine) did.
In reality, the banks find it hard to determine when a house is rented out, there is no link between the banks and the various govt. departments you have to deal with when you become a landlord. The only way they can tell is from looking at your property insurance cert as it will say whether the house is rented or owner occupied. In my case NIB asked to see this each year for the first 4 years of the mortgage but have not asked for it, so far, this year.
Have a look at your mortgage terms and conditions and see what it says.

In relation to the second point re being a first time buyer, if you buy together and your partner has already bought a house then you lose your first time buyer status.

You could consider buying alone, BUT then the bank will only assess your mortgage application on the basis of your salary and not your joint salary.

 

[agwa]

Hi Mongola,

I have been in a remarkably similar situation:
I'm an owner of a 2-bed apartment on a tracker
I bought a house with my fiancee (she was a FTB, I wasn't)

I rented out my apartment without telling the bank I wasn't going to be living there - whether this is right or wrong, I don't really care. I joined the PRTB (tenancy stuff) and made sure that I wasn't getting any TRS for this mortgage. I still have the tracker on this apartment (3 years later)

I bought a house with my fiancee (separate bank), and was able to get her name on the deeds but both our names on the mortgage. This saved us about 17k in stamp duty.

I don't think it matters now whether you're a FTB or not as you just pay 1% stamp duty.

I would say just buy the house together from a separate bank.
If you're not in negative equity, sell the apartment as it's a royal pain in the This post will be deleted if not edited to remove bad language being a landlord!


Cheers,
Agwa

 

[BettyD]

Hi there,
We were in a similar situation and have rented out our apartment. Against my wishes, my partner asked the bank if it would affect the tracker. I personally would not have told them or alerted them to it in any way. They were very coy about it on the phone and didn't give an answer. However, several weeks later, we got a letter saying tracker would not be affected (according to contract). So it depends on the contract, this was AIB.

 

[Mongola]

Macstuff: we will indeed have to go through the TC as we have assumed until now that this would be ok and we obviously can not plan based on asumptions!
The tracker is with AIB. BettyD is giving us hope!
I take the point that it would be difficult for the lender to know whether or not a property is rented or not but this is surely a big gamble.

Agwa, you are indeed in a very similar situation and i appreciate you sharing your experience there.We would like to buy togetner and yes, unfortunately we would be in negative equity. We love where we live so this is not a pb, we have no kids and while we are getting married next year, we have no intention to start a family just yet. We just want a little bit more space for ourselves. Being a landlord is not something we aspire to but this is the option that makes the most sense at the moment.