I was reading my Mortgage Memorandum and it said that if I were to rent the property out then I would need the written consent of the Mortgagee. If I wanted to lease out the property, I could do so for a period of 12 months without needing written consent. Can someone please articulate the difference between renting vs leasing? After googling the subject, it seems that the majority agree that the lease are the rules under which you are utilising the subject of the lease. The rent are the payables under the lease. Concur?
Unless it uses specific wording to mean specific things, I would generally take the terms to be interchangable. To "rent out" a property, you put a "lease" in place which defines the terms of the agreement. Either way, I would take it to mean, you can rent the property out for a period of up to 12 months without informing your lender, but you must get written consent from the mortgagee for any period longer than this. Obviously you'd need to get your own legal advice as to the exact definition of these clauses and whether they are legally enforcable (which may be moot anyway, since there are likely to be plenty of weasel clauses in the contract which allows the bank to call in the loan if they get cold feet - unlikely, but theoretically possible). May I ask who the lender is?
you may it is ING Direct. would it be overkill / naughty for me to attach the specific section I am referring to?
Okay - I've not dealt with ING Direct. Do you know if they publish different lending rates for owner occupiers vs investors? That's one reason some lenders insist on being informed if the occupancy status of the property changes. You could ring them and ask why they have that clause in their contracts.
No - let's have a look at it and the associated definitions. You'll probably find that the mortgage memorandum has been lodged in the titles office of each state and territory so it can be incorporated by reference in their mortgages. So...it's a public document. Cheers N
Sim - I do not know and I should probably find that out Nigel - thanks, I will try and post it on Monday. Though I think you are right and it is not a document tailored to ING's terms. Thanks guys.
So I called them up today and they said that I don't need to get written consent. I just need to notify them. They said if I was going to live in the place and rent out one bedroom then no notification is necessary. Should i be concerned that there seems to be inconsistency between the documentation and what their call centre is telling me?
I wouldn't be, as long as the property is insured and you are meeting your repayments they won't care what happens to the property
It's not something I've ever been concerned with ... honestly, I wouldn't worry about it. As Bill said, so long as you keep your repayments up and keep it adequately insured, the bank should have no problems.
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