Buy-To-Let Offset
Discussion
If I owned a flat with a 20% (offset) mortgage, but don't tell the bank I am letting the place out (currently occupied by myself) will they care, or should I tell them anyway. Just to add my other (main) property is owned outright - so there isn't any extra risk per se I would have though. I'm sort of expecting the usual commonsense (you should tell the bank everything) responses, but in case there is a possible reason not to mention to them?
fido said:
If I owned a flat with a 20% (offset) mortgage, but don't tell the bank I am letting the place out (currently occupied by myself) will they care, or should I tell them anyway. Just to add my other (main) property is owned outright - so there isn't any extra risk per se I would have though. I'm sort of expecting the usual commonsense (you should tell the bank everything) responses, but in case there is a possible reason not to mention to them?
I think you know the answer to your own question? 
hunton69 said:
Very little chance of getting caught out. I know bank managers that do not care and why should the bank charge a higher rate of interest when you let a property.
Why? The customer now lives somewhere else... which they have to pay for (as they have a "residential mortgage" on house 1) and must now fund house 2. However if house 1 remains empty or falls into disrepair... they will be covering 2 lots of costs and therefore a greater risk. There is zero benefit to having a mortage on house 1 if not needed so statistically a massive / significant percentage of people are funding a 2nd property. Plus BTL has fallen into the realm of the Chardonnay supping back slappers but its still a business. Which they are entitled to ask for a better rate of return on than someones house. Why?
It must be returning a profit of some sort, even factoring in a "yield" which relies on the capital appreciation instead of plain ££ received vs mortgage paid. So these are different products to reflect different financing and reasons to lend.
Don't lie to the bank - they would call the debt in on Discovery. It's stupid illegal and fraud.
Now what you need to do is ask them for permission to let. I've done this many times and it's at the prevailing mortgage rate I had. Zero risk as it's all above board documentaries and crucially authorised by the lender.
So this route will likely get you a lower effective buy To let.
Now what you need to do is ask them for permission to let. I've done this many times and it's at the prevailing mortgage rate I had. Zero risk as it's all above board documentaries and crucially authorised by the lender.
So this route will likely get you a lower effective buy To let.
Welshbeef said:
Don't lie to the bank - they would call the debt in on Discovery. It's stupid illegal and fraud.
Now what you need to do is ask them for permission to let. I've done this many times and it's at the prevailing mortgage rate I had. Zero risk as it's all above board documentaries and crucially authorised by the lender.
So this route will likely get you a lower effective buy To let.
Indeed......makes me cringe when I read "advice" from people advising others to not inform the lender.Now what you need to do is ask them for permission to let. I've done this many times and it's at the prevailing mortgage rate I had. Zero risk as it's all above board documentaries and crucially authorised by the lender.
So this route will likely get you a lower effective buy To let.
Whichever way you look at it, it's fraud.
The loan was given under an initial set of circumstances and how now changed.
I've also recently seen an incident where a person negated to inform the lender they were letting the property out...........they changed the Buildings Insurance to Landlord insurance...............tenant flooded the property, landlord claimed, insurer asked for BTL mortgage details or Consent to Let the property.........landlord had neither..................claim denied.
My friend did this for 10 years, let his old flat out and bought a house on a mortgage. Had no issues at all. Unbelievably he had both properties mortgaged with the same building society, they never twigged, both payments came out of the same account each month. This was years ago when mortgages where a lot easier to get.
Eventually he sold both properties to fund a bigger house, same BS again.
Eventually he sold both properties to fund a bigger house, same BS again.
megaphone said:
My friend did this for 10 years, let his old flat out and bought a house on a mortgage. Had no issues at all. Unbelievably he had both properties mortgaged with the same building society, they never twigged, both payments came out of the same account each month. This was years ago when mortgages where a lot easier to get.
Eventually he sold both properties to fund a bigger house, same BS again.
OP don't take this advice it's illegal fraud and you might very likely lose tens of thousands as they fire sale one of the houses at an auction and then the debt still stands and you will pay it off. Eventually he sold both properties to fund a bigger house, same BS again.
The chaps mate above somehow got lucky.
Banks are very accommodating if your open ask - they will give you the rules, it might not be possible but it might.
Welshbeef said:
megaphone said:
My friend did this for 10 years, let his old flat out and bought a house on a mortgage. Had no issues at all. Unbelievably he had both properties mortgaged with the same building society, they never twigged, both payments came out of the same account each month. This was years ago when mortgages where a lot easier to get.
Eventually he sold both properties to fund a bigger house, same BS again.
OP don't take this advice it's illegal fraud and you might very likely lose tens of thousands as they fire sale one of the houses at an auction and then the debt still stands and you will pay it off. Eventually he sold both properties to fund a bigger house, same BS again.
The chaps mate above somehow got lucky.
Banks are very accommodating if your open ask - they will give you the rules, it might not be possible but it might.
Welshbeef said:
megaphone said:
My friend did this for 10 years, let his old flat out and bought a house on a mortgage. Had no issues at all. Unbelievably he had both properties mortgaged with the same building society, they never twigged, both payments came out of the same account each month. This was years ago when mortgages where a lot easier to get.
Eventually he sold both properties to fund a bigger house, same BS again.
OP don't take this advice it's illegal fraud and you might very likely lose tens of thousands as they fire sale one of the houses at an auction and then the debt still stands and you will pay it off. Eventually he sold both properties to fund a bigger house, same BS again.
The chaps mate above somehow got lucky.
Banks are very accommodating if your open ask - they will give you the rules, it might not be possible but it might.
I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
So said:
Illegal fraud as opposed to what? Legal fraud?
I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
More likely you have 5 days to pay back the mortgage and we will not be doing business with you again - I'd wager also that within the lending market there would be a certain black mark against your name for the fraud which might mean credit options are very problematic hence Fire sale. I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
But you go for it
Welshbeef said:
Now what you need to do is ask them for permission to let. I've done this many times and it's at the prevailing mortgage rate I had. Zero risk as it's all above board documentaries and crucially authorised by the lender.
Fair enough - I'm paying well over market rates anyway (Offset) and there is very little (if any) risk to them - but it's still much cheaper than an overdraft.Edited by fido on Thursday 3rd August 10:14
Welshbeef said:
So said:
Illegal fraud as opposed to what? Legal fraud?
I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
More likely you have 5 days to pay back the mortgage and we will not be doing business with you again - I'd wager also that within the lending market there would be a certain black mark against your name for the fraud which might mean credit options are very problematic hence Fire sale. I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
But you go for it
So said:
Welshbeef said:
So said:
Illegal fraud as opposed to what? Legal fraud?
I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
More likely you have 5 days to pay back the mortgage and we will not be doing business with you again - I'd wager also that within the lending market there would be a certain black mark against your name for the fraud which might mean credit options are very problematic hence Fire sale. I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
But you go for it
Your position is hey I'm off the straight and narrow but don't worry it's ok they will offer me a product of some sorts to fix it if I get found out.
Mine fraud they will call in the debt.
Why do you ask?
Welshbeef said:
So said:
Welshbeef said:
So said:
Illegal fraud as opposed to what? Legal fraud?
I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
More likely you have 5 days to pay back the mortgage and we will not be doing business with you again - I'd wager also that within the lending market there would be a certain black mark against your name for the fraud which might mean credit options are very problematic hence Fire sale. I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
But you go for it
Your position is hey I'm off the straight and narrow but don't worry it's ok they will offer me a product of some sorts to fix it if I get found out.
Mine fraud they will call in the debt.
Why do you ask?
I'll defer to anyone else's practical experience to the contrary, but I think the most likely dialogue would be along the lines of, "you're not meant to be renting out the property, stop doing it, pay an enhanced rate or move lenders within X timeframe". I would expect X to be the realistic time necessary to refinance.
I doubt the lender would get possession if the borrower remedied the situation as soon as the error had been highlighted.
So said:
Welshbeef said:
So said:
Illegal fraud as opposed to what? Legal fraud?
I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
More likely you have 5 days to pay back the mortgage and we will not be doing business with you again - I'd wager also that within the lending market there would be a certain black mark against your name for the fraud which might mean credit options are very problematic hence Fire sale. I've not been caught renting a property on a OO mortgage but I doubt that alone would result in a fire sale of the property. I would have thought, at worst, they'd ask for their money back. More likely I'd expect them to offer to resolve the situation with a revised product.
But you go for it
As you stated, in these circumstances it's in the interest of the lender to resolve the situation with you remaining on their books.
An offer to pay the lost interest (difference between the two products over the period) and move to a new product is not uncommon. The insurance risk another poster highlighted is also something to consider very carefully indeed.
Talk of five day fire sales is hyperbole.
fido said:
If I owned a flat with a 20% (offset) mortgage, but don't tell the bank I am letting the place out (currently occupied by myself) will they care, or should I tell them anyway. Just to add my other (main) property is owned outright - so there isn't any extra risk per se I would have though. I'm sort of expecting the usual commonsense (you should tell the bank everything) responses, but in case there is a possible reason not to mention to them?
A reason not to commit fraud?Well, there's the legal and the moral one, and the downsides of the former of these if you get caught.
Welshbeef said:
Banks are very accommodating if your open ask - they will give you the rules, it might not be possible but it might.
Bullsh!t they change the rules at a whim as many lenders at our lender found out, they had to agree to original terms when taken to court then just move the goalposts/lending criteria to suit their own business purpsoes/risk. Lying barstewards don't expect me to pick up the tab for their previous dumb decisions. (Still happy on my overpriced .65% over BR though
just can't move house without being stitched up so i'll sit it out )Gassing Station | Finance | Top of Page | What's New | My Stuff