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    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 1:25 PM
    • 18Posts
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    JohnnyDancer
    Mortgage fraud, what will they do?
    • #1
    • 11th Sep 17, 1:25 PM
    Mortgage fraud, what will they do? 11th Sep 17 at 1:25 PM
    I own the upstairs flat in an old house & I share the freehold with the downstairs flat. I found myself no longer able to pay the mortgage 3 years ago so I have moved out and rented my flat without informing my mortgage company. After the first year, I switched mortgage provider and now have a new residential mortgage with them. They believe I live at the address. I have been told that although this is mortgage fraud they are unlikely to come down on me very hard and could be sympathetic to my situation (I have alcohol issues and mental issues). Does any one know what they are likely to do if they find out what I am doing? The people downstairs believe that I have a Buy To Let Mortgage and so do the tenants.
    Any advice welcome
Page 1
    • kingstreet
    • By kingstreet 11th Sep 17, 1:39 PM
    • 32,212 Posts
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    kingstreet
    • #2
    • 11th Sep 17, 1:39 PM
    • #2
    • 11th Sep 17, 1:39 PM
    Worst case I can imagine is them calling in the loan.

    You can expect to be charged a higher rate, a fee or maybe even both for consent to let, if the lender is minded to allow it.

    Who has been bandying around words like 'mortgage fraud?'
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • dunstonh
    • By dunstonh 11th Sep 17, 1:41 PM
    • 89,548 Posts
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    dunstonh
    • #3
    • 11th Sep 17, 1:41 PM
    • #3
    • 11th Sep 17, 1:41 PM
    Does any one know what they are likely to do if they find out what I am doing?
    Options can vary.

    If they consent to allow you to let the property, they will likely take no action although your interest rate may change to match their buy to let product.
    If they dont consent to let, they will give you a short period to change lender.
    Under money laundering guidelines, they should report you to HMRC as you could well be doing tax evasion as well.
    Worst case is they go for repossession and place you on the mortgage fraud register (and if you haven't declared income, HMRC will then be after you as well).

    If you were living in it when you got the mortgage and let it out later, they will be more considerate. That is not fraud. If you bought the mortgage after it was already let out and lied on the application they will likely take the stronger approach
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 2:13 PM
    • 18 Posts
    • 1 Thanks
    JohnnyDancer
    • #4
    • 11th Sep 17, 2:13 PM
    • #4
    • 11th Sep 17, 2:13 PM
    Worst case I can imagine is them calling in the loan.

    You can expect to be charged a higher rate, a fee or maybe even both for consent to let, if the lender is minded to allow it.

    Who has been bandying around words like 'mortgage fraud?'
    Originally posted by kingstreet
    Thanks for the reply, the mortgage fraud word I just picked up from the internet, I'm pretty new at this.
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 2:16 PM
    • 18 Posts
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    JohnnyDancer
    • #5
    • 11th Sep 17, 2:16 PM
    • #5
    • 11th Sep 17, 2:16 PM
    Options can vary.

    If they consent to allow you to let the property, they will likely take no action although your interest rate may change to match their buy to let product.
    If they dont consent to let, they will give you a short period to change lender.
    Under money laundering guidelines, they should report you to HMRC as you could well be doing tax evasion as well.
    Worst case is they go for repossession and place you on the mortgage fraud register (and if you haven't declared income, HMRC will then be after you as well).

    If you were living in it when you got the mortgage and let it out later, they will be more considerate. That is not fraud. If you bought the mortgage after it was already let out and lied on the application they will likely take the stronger approach
    Originally posted by dunstonh
    Thanks for the reply. When I applied for my current mortgage 18 months ago I had already been renting the property out for a year.
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 2:20 PM
    • 18 Posts
    • 1 Thanks
    JohnnyDancer
    • #6
    • 11th Sep 17, 2:20 PM
    • #6
    • 11th Sep 17, 2:20 PM
    The lender that I am currently with website says it will not consider buy-to-let if the freehold is shared.
    • BorisThomson
    • By BorisThomson 11th Sep 17, 2:21 PM
    • 538 Posts
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    BorisThomson
    • #7
    • 11th Sep 17, 2:21 PM
    • #7
    • 11th Sep 17, 2:21 PM
    Are you declaring your rental income for tax purposes?

    Where are you registered on the electoral roll?
    • dunstonh
    • By dunstonh 11th Sep 17, 2:27 PM
    • 89,548 Posts
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    dunstonh
    • #8
    • 11th Sep 17, 2:27 PM
    • #8
    • 11th Sep 17, 2:27 PM
    Thanks for the reply. When I applied for my current mortgage 18 months ago I had already been renting the property out for a year.
    Originally posted by JohnnyDancer
    In which case, that is likely to be mortgage fraud as you would have been asked in the application whether it is for your primary residence.

    You would also been required to declare your income. So, was the rental income included?

    Do you declare your rental income to HMRC?

    A get out is to remortgage it now to a buy to let mortgage and avoid any issues by putting it right now.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 3:33 PM
    • 18 Posts
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    JohnnyDancer
    • #9
    • 11th Sep 17, 3:33 PM
    • #9
    • 11th Sep 17, 3:33 PM
    In which case, that is likely to be mortgage fraud as you would have been asked in the application whether it is for your primary residence.

    You would also been required to declare your income. So, was the rental income included?

    Do you declare your rental income to HMRC?

    A get out is to remortgage it now to a buy to let mortgage and avoid any issues by putting it right now.
    Originally posted by dunstonh
    No I don't declare my rental income to HMRC, do you know what would they do?
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 3:39 PM
    • 18 Posts
    • 1 Thanks
    JohnnyDancer
    A get out is to remortgage it now to a buy to let mortgage and avoid any issues by putting it right now.
    Originally posted by dunstonh
    As far as I know because I share the freehold with the people downstairs I can't get a BTL easily.
    • copperclock
    • By copperclock 11th Sep 17, 3:42 PM
    • 217 Posts
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    copperclock
    Can you stop renting it out and move back into it?
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 3:49 PM
    • 18 Posts
    • 1 Thanks
    JohnnyDancer
    Are you declaring your rental income for tax purposes?

    Where are you registered on the electoral roll?
    Originally posted by BorisThomson
    No I'm not declaring it also I'm not registered to vote at the property address but at a different one ( my dad's)
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 3:50 PM
    • 18 Posts
    • 1 Thanks
    JohnnyDancer
    Can you stop renting it out and move back into it?
    Originally posted by copperclock
    No I can't afford to
    • dunstonh
    • By dunstonh 11th Sep 17, 3:58 PM
    • 89,548 Posts
    • 55,996 Thanks
    dunstonh
    No I don't declare my rental income to HMRC, do you know what would they do?
    Originally posted by JohnnyDancer
    They will backdate the tax you owe and charge you penalty interest.

    HMRC are able to find out properties that are rented out now. I had someone that didn't declare that was caught. it took HMRC 4 years but they got hit with a big bill. Their systems are more advanced than they used to be and thanks to electoral roll and land registry data being electronic now, they can cross reference inconsistencies. For example, your case would show you as the shared owner but the electoral roll will show someone else living there.

    HMRC have legal powers to obtain information from third parties and landlords are a target at the moment as you are not alone. A few years ago, HMRC wrote to letting and estate agents instructing them to supply names and addresses of all landlords on their books and in receipt of rental income.

    Are you complying with the legal requirements of being a landlord?
    for example, have you protected your tenant's deposit in a government approved scheme?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • copperclock
    • By copperclock 11th Sep 17, 3:58 PM
    • 217 Posts
    • 242 Thanks
    copperclock
    No I can't afford to
    Originally posted by JohnnyDancer
    I would probably seriously consider selling it then. If a BTL mortgage isn't possible and you're not going to declare to HMRC then you'll forever be looking over your shoulder.
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 4:34 PM
    • 18 Posts
    • 1 Thanks
    JohnnyDancer
    Are you complying with the legal requirements of being a landlord?
    for example, have you protected your tenant's deposit in a government approved scheme?
    Originally posted by dunstonh
    I found an ask no questions letting agent ( who advises the council) with the government approved scheme in place
    • glosoli
    • By glosoli 11th Sep 17, 5:31 PM
    • 673 Posts
    • 387 Thanks
    glosoli
    Another aspect of this is the lender was provided with a false address history at the time of the re-mortgage, so upon credit scoring it may have missed out liabilities which you have taken out at your actual address. So it would throw their entire decision to lend into question if they found out, and potentially worthy of a CIFAS registration.
    • Beetroot24
    • By Beetroot24 11th Sep 17, 6:23 PM
    • 16 Posts
    • 24 Thanks
    Beetroot24
    How did you pass the affordability when you switched the mortgage, if you can't afford to live there??
    • Rags2riches
    • By Rags2riches 11th Sep 17, 6:45 PM
    • 42 Posts
    • 12 Thanks
    Rags2riches
    Have you checked that you have valid buildings cover. You may find that this invalidates your policy.

    Why don't you do the honest thing and ask them for permission to let. Many residential mortgages will allow you to let out for a period of time such as 1 or 2 years, before they expect you to move to a BTL mortgage.
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 7:14 PM
    • 18 Posts
    • 1 Thanks
    JohnnyDancer
    Have you checked that you have valid buildings cover. You may find that this invalidates your policy.

    Why don't you do the honest thing and ask them for permission to let. Many residential mortgages will allow you to let out for a period of time such as 1 or 2 years before they expect you to move to a BTL mortgage.
    Originally posted by Rags2riches
    I've been told that most lenders won't consider a consent to let or a BTL for a property with a shared freehold. In fact, it is one of the policies of the lender that I am with. Will the insurance affect the people downstairs that I share the freehold with?
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