This for me is the big question.

I have a mortgage with a high street bank and have been struggling each month to pay it. I also have two extra rooms in the house that I could rent to people. I remember asking the bank two years ago and they said I couldn't let any part of the house.("it was one of their rules")

I dont want to ask the bank if I can rent out the rooms because if I do ask them, and they say no, and then I subsequently let the rooms out, I am frightend that they will forclose on me.

I have asked some friends of mine what to do and they say why dont you just rent the rooms out. How will the bank find out ? (they say)

I would like to know a- if I ask them if I couldlet the rooms, what would they say ? b- If I dont ask them and then they find out, what will happen ? Can they take my house away? c- do they have teams of people finding out if customers are breaking this rule? d- why is this rule there anyway - surely whatever helps them get their money back is a good thing.

The more people I ask, the more people say that they let rooms out, against the banks rules. Is this then a rule that the banks turn a blind eye to ? or will they pemalise heavily anyone breaking the rule?

What should I do ?

Please could you leave answers on this page so that other people who are in this position too can see the replies.

-- peter case (p_case@hotmail.com), June 20, 1999

Answers

It is a standard condition of most mortgages that you must seek the permission of the lender before you rent out all or part of your property. Most lenders require a fee if you ask for permission to let.

If you do not seek the lender's permission to let out the property the lender can take possession action even if you are up-to-date with payments for breach of mortgage conditions. Obviously this depends whether they are alerted to the presence of tenants - most likely if you are in arrears and they send round a debt counsellor.

In the experience of many CAB money advisers, lenders are wary of giving permission to rent out properties where the borrower is already in arrears. They express concerns about the tenants' ability to pay the rent.

A few lenders are quite willing to allow tenants and will appoint receivers to collect the rent and pay it into the mortgage account.

-- Sue Edwards (sue.edwards@nacab.org.uk), June 21, 1999.

In the early 90's I ran into difficulties paying the Bradford & Bingley mortgage on my studio flat. At this stage I had been letting my flat for some years without the knowledge or permission of the building society. I was called in to the local branch to discuss the arrears and the manager advised me verbally to start letting a room. He stressed he was doing this 'off the record' and that, officially, he was not saying anything. I assume this was to get around Head Office restrictions. I was grateful for this attitude and continued to let my flat with the unofficial consent of the local manager. A short while later I caught up with the payments and have had no further trouble.

If you request permission to let I doubt they would forclose. They are more likely to a) send you their own tenancy agreement form for you to use b) charge a one-off fee. c) possibly raise the interest rate on your mortgage by half a percent

-- Marine Boy (MarineBoy@harrywasp.prestel.co.uk), December 04, 1999.