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  • Mortgages & Finance

    Does my mortgage constitute mortgage fraud?

    Hi all,

    Me and 3 other family members are purchasing a 4 bedroom mid terrace property together, with the intention of letting out the 4 rooms to students or profesionals.

    It has come to my attention that on the BTL paperwork, that our advisor has advised us to put we'd be letting to a family, rather than the accurate situation which is that we'd be letting out each room individually.

    Our advisors justification for this seems to have been "that they're aren't many lenders that will lend to 4 people on the mortgage and that this was the only way it could be done" or something similiar.

    In stating we intend to let to one family but actually letting out each room individually, are we obtaining the mortgage by deception/dishonestly and committing mortgage fraud?

    Personally, I don't like the woman we're using as broker, but the family has this old-school "she's our mate from years back" mentality that they can't seem to shift.

    When raising these concerns to other parties involved I got the usual "there's no such thing as mortgage police, as long as you pay your mortgage noboby cares"

    I would rather not set out on the wrong foot doing anything even remotely sketchy so can someone advise as to whether I'm taking a mistep here,

    Cheers,

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    You are probably correct, it is mortgage fraud and both you and your broker are part of it. I say probably as if you rent to 4 on one AST and that lender will allow it on the same product, then putting family instead of students/professionals is incorrect information and not fraud, as you are not gaining financially from this. But if they won't lend on one AST and that is your intention, then it definitely is.

    Lenders identify this daily as there are many ways to find out and I've seen numerous examples of new clients coming to me who have to remortgage quickly when the lender has found out. Lenders do blacklist on https://www.nhunter.co.uk/ and if you go on there, you can all forget any type of finance in the future. The "mortgage police" definitely exist and are very busy.

    It's difficult as others don't share your values and the friendship with the broker is a hurdle. There should be plenty of lenders in the market that would do this type of mortgage if you and the property meet the lender's criteria.

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    Regards Simon Searchlight Finance

    Fulfil Your Property Ambitions

    01565 654005

    Searchlight Finance Ltd is authorised and regulated by the Financial Conduct Authority reference 743220.

    HMO Finance I Complex BTL I Bridging Finance I Development Finance

    Buy to Let I Portfolio Finance I Commercial Mortgages


    There are any number of lenders that will do 4 applicants for a student let - and at great rates.

    Any one who has known me over the past years on this forum will know that I am of the "tell all" to lenders philosophy.  That way you will be able to sleep at night.  This industry has far too many "useful idiots" that should be setting a better example.  Collusion of this type makes the broker culpable too.  The times have changed where some lenders were in on the act, to a certain degree, and "rule bending" was the order of the day to increase sales figures on both sides of the divide.

    My advice would be to stop now while you can.  Take some advice from a reliable broker (we would be happy to assist) and you will be able to sleep soundly at night.

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    __________________________________________________________________

    BTL's, residential mortgages, bridging, life cover and estate planning  

    http://www.hdconsultants.net        

    For Commercial Finance, complex BTL and HMO funding, development finance, international and expat mortgages, and portfolio BTL mortgage services Assured Funding website.

    Telephone: 07751042485      01206 654444

    1. A minority Standard Buy-to-Let Mortgages allow letting to up to 4 people. Check the paperwork.
    2. If your mortgage conditions prohibit what you intend. Do not Proceed.
    3. Mortgages are policed by the lender. They often get notified from councils if you rent as an HMO.
    4. On the event of default. They will ask for full payment, including early repayment fees and other charges. Its a big profit for them when you breach, the whole "just pay and its ok" is false.
    5. The lender may also list you on CIFAS or HUNTER. Preventing any further finance for many years.
    6. Any insurance such as buildings would likely be invalid.

    It sounds like your broker is either incompetent or ruthlessly negligent. There are plenty of lenders who are happy with you renting out rooms, instead of to a single family.

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    _________________________________________________________________________


    My posts are not financial advice but often me rambling - passing time on a coffee break.
    Our team at Bespoke Finance offers Limited Company Buy-to-Let and Cheap Life Insurance.

    _________________________________________________________________________


    Wee_Bay,

    I wrote another article on here yesterday about HMO mortgages from 1.62%.  I have checked and this lender allows up to 4 applicants on the application form.  There are still other things to check, but you will be in a position to proceed without looking over your shoulder all the time.

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    __________________________________________________________________

    BTL's, residential mortgages, bridging, life cover and estate planning  

    http://www.hdconsultants.net        

    For Commercial Finance, complex BTL and HMO funding, development finance, international and expat mortgages, and portfolio BTL mortgage services Assured Funding website.

    Telephone: 07751042485      01206 654444