1st Time buyer ... Will they find out ?
Discussion
Hello
My son is wanting to buy a property and has saved enough deposit for a small house, realistically probably only a 10% deposit at the moment.
My question is :- if he obtained a residential mortgage and then rented it out , what is the likelihood of the mortgage lender finding out ?
I’m also aware that if he saves enough for a BTL then it’s going to cost him when he eventually does want to buy his own place with the extra stamp duty due already owning a property.
Thanks
Mark
My son is wanting to buy a property and has saved enough deposit for a small house, realistically probably only a 10% deposit at the moment.
My question is :- if he obtained a residential mortgage and then rented it out , what is the likelihood of the mortgage lender finding out ?
I’m also aware that if he saves enough for a BTL then it’s going to cost him when he eventually does want to buy his own place with the extra stamp duty due already owning a property.
Thanks
Mark
The banks are very wise to this and have processes in place to identify it. If you get caught they will likely recall the mortgage and then you will have a month or less to pay back the whole loan while having sitting tenants that also have rights. You may get away with it but if you don’t then you will cause a headache for years
gregs1959 said:
Hello
I’m also aware that if he saves enough for a BTL then it’s going to cost him when he eventually does want to buy his own place with the extra stamp duty due already owning a property.
Mark
Plus, getting a BTL mortgage when you don't already own another property is difficult as well.I’m also aware that if he saves enough for a BTL then it’s going to cost him when he eventually does want to buy his own place with the extra stamp duty due already owning a property.
Mark
Why does he want to buy a house when he doesn't already own one and not live in it himself?
Joey Deacon said:
Plus, getting a BTL mortgage when you don't already own another property is difficult as well.
Why does he want to buy a house when he doesn't already own one and not live in it himself?
Because he’s seen me owning property that I rent out , and more recently his brother ...Why does he want to buy a house when he doesn't already own one and not live in it himself?
Chamon_Lee said:
Your asking for trouble.
I think people got away with it to some extent back in the day but I wouldn’t chance it today.
Keep it above board or don’t bother.
Agreed, it sounds like he doesn't have much deposit so after paying an agent, fees, voids, repairs how much money is he likely to end up with?I think people got away with it to some extent back in the day but I wouldn’t chance it today.
Keep it above board or don’t bother.
Sounds lovely in theory, sit at home collecting the money. Not so great when :
1)You get a call from the agent telling you the tenants have reported the heating isn't working and a new boiler is needed.
2)The rent doesn't appear in your account and the agent is "chasing the tenants"
Where does he live now?
Besides the issues with the bank (could ask for CTL I guess) the main issue I have is it sounds like he is not exactly rolling in money, what happens when the tenant phones saying the boiler needs replacing, or there is a leak. Etc...etc
Doing something because others do it is never a great idea. The BTL market has changed to much recently and doing it just on a whim without proper planning or finances in places is IMHO just asking for trouble.
Besides the issues with the bank (could ask for CTL I guess) the main issue I have is it sounds like he is not exactly rolling in money, what happens when the tenant phones saying the boiler needs replacing, or there is a leak. Etc...etc
Doing something because others do it is never a great idea. The BTL market has changed to much recently and doing it just on a whim without proper planning or finances in places is IMHO just asking for trouble.
Definitely advise he does not do this. I am a surveyor and valuer, and mortgage lenders are extremely vigilant on what is known as ‘suspicious activity ‘.
I have seen first hand the fallout from cases where property has been repossessed and sold on quick at repo price level when a lender finds out about letting without consent - leaving the borrower’s credit rating in tatters. Not a good start for someone just starting on the housing ladder...
I am not a financial advisor, but if the numbers don’t add up buying the property though a legit BTL product, then don’t buy it!
I have seen first hand the fallout from cases where property has been repossessed and sold on quick at repo price level when a lender finds out about letting without consent - leaving the borrower’s credit rating in tatters. Not a good start for someone just starting on the housing ladder...
I am not a financial advisor, but if the numbers don’t add up buying the property though a legit BTL product, then don’t buy it!
Killer2005 said:
1. That would be mortgage fraud
2. Lenders can run a credit check on the address after a few months to show who is living there, so they could.
They also review the electoral role data to see who is registered at the property after completion.2. Lenders can run a credit check on the address after a few months to show who is living there, so they could.
Your buildings insurance would be void too...........
gregs1959 said:
Joey Deacon said:
Plus, getting a BTL mortgage when you don't already own another property is difficult as well.
Why does he want to buy a house when he doesn't already own one and not live in it himself?
Because he’s seen me owning property that I rent out , and more recently his brother ...Why does he want to buy a house when he doesn't already own one and not live in it himself?
Your “reason” sounds pretty feeble!
FazerBoy said:
Kent Border Kenny said:
As above, starting off his financial life by committing fraud is really not the way to go.
You seem fine with the idea, though, so it’d be fair to assume he’s a long way from the straight and narrow already, in which case why not pick a more lucrative crime?
You seem fine with the idea, though, so it’d be fair to assume he’s a long way from the straight and narrow already, in which case why not pick a more lucrative crime?
It does seem an odd fatherly thing to do.
I haven’t been a saint, but I can’t say it has ever crossed my mind to encourage our kids to commit fraud....or any other crime, tbh.
He might get away with it, but have you told him about all the downsides too...
He might have it empty for 3 months before anyone moves in, and will still be expected to find the mortgage payments.
Changes to tenancy laws mean that landlords are now responsible for most upfront costs (checks etc).
If the tenant doesn't pay, he still needs to pay the mortgage, but also find money to take them to court and employ agents to get the property back.
He'll (legally) need to declare the income as part of his self assessment form.
He is going to have to lie to the mortgage providers when the mortgage period comes for renewal.
It is 100% possible to buy somewhere, rent it out on a residential mortgage for years, never declare it to the taxman and earn a good return. But it's also possible to try and do that, get caught, lose a load of money and potentially have marks against your name for years, as well as a back-dated tax bill which he might not have money to pay.
What is right or wrong is up to him or you.
He might have it empty for 3 months before anyone moves in, and will still be expected to find the mortgage payments.
Changes to tenancy laws mean that landlords are now responsible for most upfront costs (checks etc).
If the tenant doesn't pay, he still needs to pay the mortgage, but also find money to take them to court and employ agents to get the property back.
He'll (legally) need to declare the income as part of his self assessment form.
He is going to have to lie to the mortgage providers when the mortgage period comes for renewal.
It is 100% possible to buy somewhere, rent it out on a residential mortgage for years, never declare it to the taxman and earn a good return. But it's also possible to try and do that, get caught, lose a load of money and potentially have marks against your name for years, as well as a back-dated tax bill which he might not have money to pay.
What is right or wrong is up to him or you.
Condi said:
He is going to have to lie to the mortgage providers when the mortgage period comes for renewal.
Which he will struggle with given that he won't be on the electoral roll at the address, driving license won't be in the right address, bank statements will not be in the right address and all credit will be registered elsewhere............tenants will be registered at the property address instead...........everything will be telling the lender that he doesn't live at the address, other people do and he's looking to commit mortgage fraud..........which could potentially end up with him being put on the CIFAS or Hunter systems which would make it nigh on impossible to get a mortgage again.........Just do it the right way............
I would just do it anyway, and 6 months or so in... in ask for a Consent to let.
(ie have the conversation with the mortgage company about your "change in circumstances")
I guess the additional costs will depend on what Mortgage company you end up with and their extra fee's / admin charges..or the risk that they shift you to a more expensive product.
(ie have the conversation with the mortgage company about your "change in circumstances")
I guess the additional costs will depend on what Mortgage company you end up with and their extra fee's / admin charges..or the risk that they shift you to a more expensive product.
Bullet-Proof_Biscuit said:
My mortgage broker said to try getting a first time mortgage as a BTL is ‘too hard to bother trying’
And I was looking at £15k down on a 55k terrace in Teeside!! (I’m in London),
Is this recent? Speak to Sarnie above. Londoners buying property elsewhere to get on the ladder is not unusual And I was looking at £15k down on a 55k terrace in Teeside!! (I’m in London),
Bullet-Proof_Biscuit said:
My mortgage broker said to try getting a first time mortgage as a BTL is ‘too hard to bother trying’
And I was looking at £15k down on a 55k terrace in Teeside!! (I’m in London),
In my honest opinion, that sounds more like your balance was too low for the Broker to be bothered helping you with..........And I was looking at £15k down on a 55k terrace in Teeside!! (I’m in London),
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