Just under three years ago we moved to Belgium (before ending up in NZ) and started renting out our property in the UK. This was and still is our family home and we own no other property. We informed our mortgage company (Nationwide) and they said it was fine and would not affect our 10 year fixed rate mortgage. We received no notification that this would alter our mortgage in any way and had to sign no forms or any other correspondence.
We set up the appropriate letting insurance and everything else was organised by our letting agent. We assumed everything was fine and have been lucky enough to rent out our property fairly continually for the past few years.
Now we took out the fixed rate mortgage so that we knew exactly what we would be paying each month and could plan finances accordingly. Everything was going swimmingly until yesterday morning when I received a letter from Nationwide in the post. They are now putting up the rate of interest on our "fixed rate mortgage" by 1.5%.
Apparently as we are letting out our property we are going to cost them more money and are somehow a greater risk. Therefore if we had originally taken out a buy to let mortgage we would be charged a higher rate and be making the company more money. So in order to address this shortfall they are going to put the interest up on our "fixed rate" mortgage.
I do not understand how they can legally do this. Surely they should have informed us when we initially told them we were intended to let our home. If they had we would have reconsidered and may well have sold the property then. Now we are faced with a large increase in our mortgage payments. The rent on our property does not cover our current mortgage payments so there is no way it is going to stretch to this sudden increase.
I realise this is not like my normal blog postings but I feel this issue is something other expats may want to be aware of. Needless to say I am in contact with Nationwide and fighting my corner. I am currently awaiting a copy of the clause in our contract which allows them to change the terms of our 10 year fixed rate mortgage in this way.
A VERY ANGRY EXPAT rant. Thanks for reading :)