Remortgage question
Discussion
Hi folks, quick remortgage legality question for you.
Hypothetically, someone is applying for a remortgage and wants to increase the amount they were borrowing - say by 50k. They tick all the declarations to say the additional is for home improvement. Ostensibly, to the lender, they are going to use the money for a house extension. In reality they intend to use the extra 50k to purchase land for their business, nothing to do with the home at all.
Is this fraudulent? How much of a horrendous idea is this? It's not me before anyone asks!
Hypothetically, someone is applying for a remortgage and wants to increase the amount they were borrowing - say by 50k. They tick all the declarations to say the additional is for home improvement. Ostensibly, to the lender, they are going to use the money for a house extension. In reality they intend to use the extra 50k to purchase land for their business, nothing to do with the home at all.
Is this fraudulent? How much of a horrendous idea is this? It's not me before anyone asks!
Not a bad idea and what a lot of people are doing right now, including a friend of mine.
Where the skids appear to be coming off is that - despite the interest rates being low, a lot of the remortgagers are playing the "affordability" card - yes I know the new mortgage has £300 a month lower payments but you are looking to go for another 20-25 years so thats scary. So we will say no. And keep you on your current eye watering rate. despite the fact you have been with us for years and pay X amount.......X-300 a month is bad for us so we will tell you you cant have that mortgage. sorry
Where the skids appear to be coming off is that - despite the interest rates being low, a lot of the remortgagers are playing the "affordability" card - yes I know the new mortgage has £300 a month lower payments but you are looking to go for another 20-25 years so thats scary. So we will say no. And keep you on your current eye watering rate. despite the fact you have been with us for years and pay X amount.......X-300 a month is bad for us so we will tell you you cant have that mortgage. sorry
48k said:
Not a bad idea and what a lot of people are doing right now, including a friend of mine.
Where the skids appear to be coming off is that - despite the interest rates being low, a lot of the remortgagers are playing the "affordability" card - yes I know the new mortgage has £300 a month lower payments but you are looking to go for another 20-25 years so thats scary. So we will say no. And keep you on your current eye watering rate. despite the fact you have been with us for years and pay X amount.......X-300 a month is bad for us so we will tell you you cant have that mortgage. sorry
That's down to the FCA enforcing stress testing of borrowers onto lenders. It's theoretically for your own protection, but like all rules delivered by the Civil Service the phrase "the operation was a success, but the patient died" is very much to the fore. Where the skids appear to be coming off is that - despite the interest rates being low, a lot of the remortgagers are playing the "affordability" card - yes I know the new mortgage has £300 a month lower payments but you are looking to go for another 20-25 years so thats scary. So we will say no. And keep you on your current eye watering rate. despite the fact you have been with us for years and pay X amount.......X-300 a month is bad for us so we will tell you you cant have that mortgage. sorry
In answer to the OP, it's fraudulent. It's not difficult to work out that what's being said around the use of money is different to how the money will be used, that's a pretty obvious indicator.
What has it got to do with you? Do Their actions have an effect on your normal Daily life? If not why not go and do something useful?
99.9% of people who have got where they have got have lied at some point. If the people in question can afford the repayments whats the problem?
This is why I dislike Britain despite being British.
99.9% of people who have got where they have got have lied at some point. If the people in question can afford the repayments whats the problem?
This is why I dislike Britain despite being British.
CDB1983 said:
What has it got to do with you? Do Their actions have an effect on your normal Daily life? If not why not go and do something useful?
99.9% of people who have got where they have got have lied at some point. If the people in question can afford the repayments whats the problem?
This is why I dislike Britain despite being British.
Maybe he's concerned about someone he cares about making a bad decision? Don't believe the hype, most people, even British, are generally decent.99.9% of people who have got where they have got have lied at some point. If the people in question can afford the repayments whats the problem?
This is why I dislike Britain despite being British.
Monkeylegend said:
CDB1983 said:
99.9% of people who have got where they have got have lied at some point. If the people in question can afford the repayments whats the problem?
This is why I dislike Britain despite being British.
Are you one of the 0.1% who didn't then?This is why I dislike Britain despite being British.
I can well believe that people who run their own businesses have lied at some point, even if it's just to say "of course we can do that" to win a deal with no real idea yet if it is something they can deliver.However, there's a difference between doing that and fraud, which is what I imagine this sort of thing would be. If everything works out and they keep paying off the mortgage, it probably won't be a problem and will never be discovered. If things go belly up, it will be found out and they'll be done for this in addition to losing the house, etc...
Bigyoke said:
It would be construed as fraud by false representation IF the lender reported it, however, as long as the loan is being serviced mortgage companies tend not to be too bothered about that little "technicality". Ironically, even more so if the property is in negative equity.
Is this all part of the bank's new level of responsibility and duty to ensure we don't have another 2008 ?
CDB1983 said:
What has it got to do with you? Do Their actions have an effect on your normal Daily life? If not why not go and do something useful?
99.9% of people who have got where they have got have lied at some point. If the people in question can afford the repayments whats the problem?
This is why I dislike Britain despite being British.
Jesus, slow down killer. 99.9% of people who have got where they have got have lied at some point. If the people in question can afford the repayments whats the problem?
This is why I dislike Britain despite being British.
It's one of my relatives and I want to make sure they're not getting themselves into a right hole.Rubin215 said:
Similar situation; is it legal to remortgage for extra funds to use as a deposit for a buy-to-let property?
Technically, that's also going to be business use...?
This is legal because you're just releasing equity. That would also not be a problem for the business case above.Technically, that's also going to be business use...?
The reason that they're on sticky ground is that they're asking for more funds, which in return will result in an increase in the value of the house. So, the lender is lending against an asset that will be worth more once work completes. If they don't do the work, they've misrepresented their application, and (I assume) obtained funds by deception or however the law would describe the fraud.
If the chap said "my house is worth £600k, my mortgage is only £150k and I'd like to increase this to £200k free up £50k to expand my business" then assuming LTV and affordability criteria are met then I can't see the back having an issue.
This is different to house worth £600k, mortgage of £550k, and asking for £50k to extend to give a house worth £700k afterwards. The LTV the bank work on is, I imagine, the LTV of the property after the extension. As the house gets no extension and is till only worth £600k, the bank would be in a much different position to where they expected to be.
I'm sure the numbers are different, but the principle is as above.
Rubin215 said:
Similar situation; is it legal to remortgage for extra funds to use as a deposit for a buy-to-let property?
Technically, that's also going to be business use...?
Its legal to remortgage and use the released funds for coke and hookers. Its telling them its for one thing then using it for something else that's a problem. It seems especially unwise stating the purpose for the funding is to improve the mortgaged asset, when its not.Technically, that's also going to be business use...?
You certainly used to be able to get funds added to your mortgage to buy cars, caravans holidays etc, I have done this (a few years back) and used the money for BTL deposits. My broker did not advise me to do this but suggested saying it was for personal spending would be more likely to be approved than for BTL deposits!
Oops
I re-mortgaged and used some of the funds to buy a car (midlife crisis and all that) but that was all cleared with the lender beforehand.
Then I went over budget. Man maths eh?
Maybe I should flagellate myself in penance.
But I didn't mean to spend more. Honestly. It was Mrs Bills who said "why don't you just buy it". She's a keeper.
I re-mortgaged and used some of the funds to buy a car (midlife crisis and all that) but that was all cleared with the lender beforehand.
Then I went over budget. Man maths eh?
Maybe I should flagellate myself in penance.
But I didn't mean to spend more. Honestly. It was Mrs Bills who said "why don't you just buy it". She's a keeper.
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