A property advice service is suggesting that almost anything done to make money from a property could land the owner or investor in trouble.

Nerdwallet says there are many ways mortgage holders could invalidate their mortgage agreement without realising. 

Taking in a lodger – Taking in a lodger could help homeowners mitigate rising costs. And the Government’s Rent a Room Scheme, which allows people to earn up to £7,500 per year tax-free from letting out furnished accommodation, has made the practice more tempting.

Nerdwallet says: “However, many may be surprised to learn that taking in a lodger could break their mortgage agreement. Before taking on a lodger, you must get permission from your lender by contacting them directly. Usually they are happy to give permission, but sometimes there can be issues. If you do not inform your lender and still take on a lodger, you could put yourself at risk of potentially losing your home. If you have a leasehold or shared ownership property, you may also need to get permission from the other relevant parties.”

Making alterations – “Your mortgage agreement could state that any alterations that may affect the value of a property must be reported to your lender.  This is usually a straightforward process because most alterations, such as extensions, will increase the value of your property. But not informing your lender about alterations and doing them regardless could result in a breach of terms and conditions.”

Renting it out – “You must inform your mortgage provider because you are unable to let your property under the terms of a residential mortgage. Your provider could then change your mortgage to a buy-to-let agreement. If you’re only looking to rent out your house on a temporary basis, some lenders may grant you a consent to let. 

“But your lender might charge you for this, either as a fee or as additional interest, and the consent will only be valid for a specified length of time. At the end of the agreement, you may be able to get an extension if needed, or you may be able to switch to a buy-to-let mortgage if you want to continue renting out your house.

“The same applies if you decide to put your house on a site like Airbnb.”

Adam French, senior editor at NerdWallet, says: “It’s important for homeowners with a mortgage to read the terms and conditions of their mortgage thoroughly before agreeing to take it on so they know exactly what is permitted and what isn’t. Breaking a mortgage agreement in any way can have severe consequences, putting them at risk of losing their home, facing a penalty, or having their terms changed, which could result in the end of their current agreement and facing a new, potentially higher, monthly repayment.”