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    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 1:25 PM
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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 2
    • glosoli
    • By glosoli 11th Sep 17, 7:17 PM
    • 633 Posts
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    glosoli
    Can't you just sell it?
    • IAmWales
    • By IAmWales 11th Sep 17, 7:17 PM
    • 1,223 Posts
    • 2,586 Thanks
    IAmWales
    How did you pass the affordability when you switched the mortgage, if you can't afford to live there??
    Originally posted by Beetroot24
    In case you missed it OP ...
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 7:37 PM
    • 18 Posts
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    JohnnyDancer
    In case you missed it OP ...
    Originally posted by IAmWales
    I still had my job as a teacher for another few months.
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 7:43 PM
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    JohnnyDancer
    Can't you just sell it?
    Originally posted by glosoli
    I couldn't afford the mortgage payments whilst it was on the market. So I thought stick tenants in it, then move back in when my luck changed.
    • glosoli
    • By glosoli 11th Sep 17, 8:01 PM
    • 633 Posts
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    glosoli
    The only thing standing between you and big trouble is a lender conducting an audit check of their mortgage book, and it will quickly come to light that your property is rented out. You may have missed it so far but eventually it will catch up on you. As as much sympathy as I have regarding the mental health issues and alcoholism, to be blunt I don't think they will have much sympathy at all, as after all you have lied to them. Luckily you still have time to sort it out and do the right thing, for if you don't then you will likely get a CIFAS, which has implications for the next six years and may entail having all of your existing accounts closed down (i.e current accounts), and essentially be blacklisted for the next six years. What is more trouble, selling the property or that?

    I used to work in the mortgage services department of a lender back in 2009 ish, when the base rate went to rock bottom. There was suddenly great profits to be made in people renting out properties which had old lifetime base rate trackers. It was remarkably easy for a lender to quickly check the electoral register and to investigate further.

    Not to mention you are acting irresponsibly by having a property with insurance which is likely to be invalid. What would you do if the property burned to the ground tomorrow due to reckless tenants and the insurer refused to pay out?
    Last edited by glosoli; 11-09-2017 at 8:05 PM.
    • silvercar
    • By silvercar 11th Sep 17, 8:10 PM
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    silvercar
    Is there any equity in the property?

    I would:
    a) see a mortgage broker who will know whether a BTL mortgage is possible. If it is then remortgage with the new lender and the problem is solved. No lender is going to retrospectively chase you when you are no longer a customer. I suspect that you may struggle finding a BTL mortgage without owning your own home as well as the shared freehold issue.
    b) if there is no mortgage possible then you need to consider selling up. It is a shame you remortgaged as there was definitely deception at the point, whereas you obtained the original mortgage in a more honest way.

    Also I would now contact hmrc and own up to the undeclared tax. By the time you tot up allowable expenses, including interest on the mortgage, the bill may be small. Though there will be penalties, they will be smaller than if you were discovered and chased by hmrc.

    Thirdly, look after yourself. These are money problems and will have a solution. You need to look after your mental and physical health too.
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 9:27 PM
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    JohnnyDancer
    The only thing standing between you and big trouble is a lender conducting an audit check of their mortgage book, and it will quickly come to light that your property is rented out. You may have missed it so far but eventually it will catch up on you. As as much sympathy as I have regarding the mental health issues and alcoholism, to be blunt I don't think they will have much sympathy at all, as after all you have lied to them. Luckily you still have time to sort it out and do the right thing, for if you don't then you will likely get a CIFAS, which has implications for the next six years and may entail having all of your existing accounts closed down (i.e current accounts), and essentially be blacklisted for the next six years. What is more trouble, selling the property or that?

    I used to work in the mortgage services department of a lender back in 2009 ish, when the base rate went to rock bottom. There was suddenly great profits to be made in people renting out properties which had old lifetime base rate trackers. It was remarkably easy for a lender to quickly check the electoral register and to investigate further.

    Not to mention you are acting irresponsibly by having a property with insurance which is likely to be invalid. What would you do if the property burned to the ground tomorrow due to reckless tenants and the insurer refused to pay out?
    Originally posted by glosoli
    With your experience, do you think they will call in the loan?
    • JohnnyDancer
    • By JohnnyDancer 11th Sep 17, 10:01 PM
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    JohnnyDancer
    no equity in the property.
    • silvercar
    • By silvercar 11th Sep 17, 10:24 PM
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    silvercar
    no equity in the property.
    Originally posted by JohnnyDancer
    You won't get a BTL mortgage without a sizeable deposit. So your options are very limited (unless you have savings to use).

    So the only options seem to be to continue as you are now with a residential mortgage or let the tenants go and sell quickly. I suppose the third option is to hand the keys back to the lender and walk away.

    Mortgage issues aside for the moment, you should come clean with hmrc and sort your tax situation.
    • csgohan4
    • By csgohan4 12th Sep 17, 6:33 AM
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    csgohan4
    With your experience, do you think they will call in the loan?
    Originally posted by JohnnyDancer


    I think your walking on thin ice and forever looking over your shoulder. Is losing everything and not being able to get a mortgage for a long long time worth what your doing now?


    Being on a national fraud register is not something to take lightly, you are also committing insurance fraud as well and may make you getting any kind of insurance difficult at best


    Declare the tax and either sell the flat or get a consent to let. Burying your head in the sand will not do you any favours.


    Do you really want to get a dreaded HMRC investigation or a letter demanding the whole loan come through?


    Do it for the sake of your tenants, as if your not declaring tax, what else are you skimping on? Gas safety check ? e.t.c
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
    • macman
    • By macman 12th Sep 17, 8:27 AM
    • 41,291 Posts
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    macman
    If I understand correctly, you've knowingly committed mortgage fraud and tax evasion for 2 years-so what has changed for you to now ask at this point 'what will happen'?
    I'm still not clear if the deposit is protected, and if the property has a valid gas safety certificate (if required). The latter is a very serious offence, so get that sorted as a priority.
    No free lunch, and no free laptop
    • silvercar
    • By silvercar 12th Sep 17, 8:50 AM
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    silvercar
    If I understand correctly, you've knowingly committed mortgage fraud and tax evasion for 2 years-so what has changed for you to now ask at this point 'what will happen'?
    I'm still not clear if the deposit is protected, and if the property has a valid gas safety certificate (if required). The latter is a very serious offence, so get that sorted as a priority.
    Originally posted by macman
    There is little point in raking over old ground. The question is how now to set things right.

    The tax situation won't go away. So OP needs to make amends with hmrc irrespective of any other action.

    The mortgage situation gives OP some options. I would think remortgaging to a new lender would be impossible with no equity. So the only options I can see are:
    a) sell up, that could mean mortgage arrears (or a loan from elsewhere) while you sell
    b) handing the keys back to the lender (you've no equity to protect, but risk being at the whim of the lender's choice of action and it may result in an eventual shortfall that will need to be dealt with in the future)
    c) telling the lender you have moved out and are letting the property. When they tell you they don't consent you tell them the tenants are already in. At which point the ball is in the lender's court.
    • JohnnyDancer
    • By JohnnyDancer 12th Sep 17, 10:17 AM
    • 18 Posts
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    JohnnyDancer
    If I understand correctly, you've knowingly committed mortgage fraud and tax evasion for 2 years-so what has changed for you to now ask at this point 'what will happen'?
    I'm still not clear if the deposit is protected, and if the property has a valid gas safety certificate (if required). The latter is a very serious offence, so get that sorted as a priority.
    Originally posted by macman
    What's changed is I think the people in the property downstairs, who I share the freehold with, have worked it out and I think that they are having difficulties with the tenants. I also tried to trick them out of a large amount of money and they worked it out .
    • Brock_and_Roll
    • By Brock_and_Roll 12th Sep 17, 10:48 AM
    • 756 Posts
    • 726 Thanks
    Brock_and_Roll
    OP - I am sure you will agree that its a bit of a mess. In your situation I would be 100% more worried about the HMRC than I would about the lender. The lender primarily is just interested in getting their money back whereas HMRC will not hesitate to prosecute and worst case scenario there is the possibility of jail time and a big bill.


    To me it looks like unless you can sell the property quickly and get out with your nose above water, the best option will probably be to come clean, mea culpa. Perhaps actually this will reduce the stress and alcohol issues?
    • silvercar
    • By silvercar 12th Sep 17, 3:10 PM
    • 35,874 Posts
    • 151,070 Thanks
    silvercar
    OP - I am sure you will agree that its a bit of a mess. In your situation I would be 100% more worried about the HMRC than I would about the lender. The lender primarily is just interested in getting their money back whereas HMRC will not hesitate to prosecute and worst case scenario there is the possibility of jail time and a big bill.
    Originally posted by Brock_and_Roll
    I agree that you need to sort things out with hmrc as a priority.

    I think your worst case scenario is hardly likely. Hmrc do not send people to jail just because they have undeclared and unpaid tax. Jail is reserved for those who have swindled them out of money, rather than not paid what they owe.

    Worst case scenario is that you get a big bill that you cannot afford. At which point you try and agree a payment schedule with them. Failing that they could (and do) petition for bankruptcy.
    • JohnnyDancer
    • By JohnnyDancer 12th Sep 17, 7:58 PM
    • 18 Posts
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    JohnnyDancer
    One more thing, I've been travelling for the last year do you think this has any bearing on my situation?
    • glosoli
    • By glosoli 12th Sep 17, 8:42 PM
    • 633 Posts
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    glosoli
    No not really.
    • csgohan4
    • By csgohan4 12th Sep 17, 10:04 PM
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    csgohan4
    OP if your real, get some professional advice, seems your wanting to hear what you want which is not what this forum all about.


    Your clearly breaking the terms of your mortgage and evading tax, and hence breaking the law. Your life not ours if you choose to ignore it.


    Will be waiting for the HMRC investigation thread on the 'Cutting tax' thread soon
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
    • JohnnyDancer
    • By JohnnyDancer 13th Sep 17, 2:42 PM
    • 18 Posts
    • 0 Thanks
    JohnnyDancer
    OP if your real, get some professional advice, seems your wanting to hear what you want which is not what this forum all about.


    Your clearly breaking the terms of your mortgage and evading tax, and hence breaking the law. Your life not ours if you choose to ignore it.


    Will be waiting for the HMRC investigation thread on the 'Cutting tax' thread soon
    Originally posted by csgohan4
    Thank you, this is unfortunately very real. This scheme of mine was recommended to me by colleagues and acquaintances that are doing the same thing. When I lied on the recent application I didn't think anything of it, I didn't really think about it being right or wrong.
    • JohnnyDancer
    • By JohnnyDancer 13th Sep 17, 2:44 PM
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    • 0 Thanks
    JohnnyDancer
    Thank you, everybody, for all your advice and time spent. I think I will come clean with the Mortgage Company & HMRC.
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