Second home mortgage versus Buy to Let

Trollfever

A member of the family has been struggling to pay the mortgage

Check out voidable preference with The Insolvency Service.

VIGILANT22

V J Conn MORTGAGE ADVISOR

I am sure you know the rules on SRB, as does your compliance..:(

poppy10_2

V_J_Conn wrote: »

Then the next step is owrk with a helpful whole of market broker
BuyToLet Vivienne

No touting for work, Ms Conn

VIGILANT22

poppy10 wrote: »

No touting for work, Ms Conn[/QUOTE

Otherwise they will be in the "PINK"......

ohwattagosiam

PasturesNew wrote: »

It is possible that the benefits people will view the transaction as a Contrived Tenancy and not pay him a bean as it looks like a scheme for him to get the taxpayer to pay his mortgage.

So be aware of that and research: Contrived Tenancy.

THanks for this. I have looked it up and I think it's unlikely that they would see this as a Contrieved Tenancy due to: (a) How close he's been to losing his home recently (there's documentry evidence to support this, including a couple other outstanding debts which I would cover as well); (b) I would be charging only what Housing Benefit have already confirmed they would pay based on a property of this size, and his circumstances. And finally (c) I don't believe it would fall under unnecessary liabilities either.

VIGILANT22 wrote: »

As far as lenders and the FSA are concerned this falls under SRB/SALE and RENT BACK.....Neither are "happy" about these transactions....Unless people take advice they're unaware of these schemes.
People think if family are in difficulties the easy answer is to buy cheap and rent back, they have no idea this falls under Sale and Rent Back and going by the posts on here this is certainly true.
Believe it or not lenders are not "daft". You can't buy a property as a 2nd property or BTL at a hugely discounted price and not declare this...even a "simple" underwriter will identify this by simply looking at the figures.
You can't massage the truth and not declare this is a SRB unless you want to commit mortgage fraud.
But some people think they know better and try to get away with it...
You will always find people who will push boundaries. (advisors/clients)
If mortgage fraud is committed not only will the advisor be struck off but in these cases the loan will be recalled and a family left homeless.

Even for a purchase that is not SRB, if the valuation is 150k and you buy at 75k, then the mortgage is based on 75k and you still need a deposit. Just because equity is in the house you cannot use this as a deposit except is some rare circumstances........

From the looks of things SRB is firmly in the domain of large businesses bailing out home owners. Where as, I'm not a business, and this is simply one family member clearing the debt of another. Also, we would have to have a proper tenancy agreement in place for him to qualify for Housing Benefit anyway. Not that I would ever turf him out, unlike some of the dodgy companies I've read about :mad:

EDIT: A deposit wouldn't be an issue, and although I wouldn't tell him this, I could cover the mortgage whether or not he was in it.

VIGILANT22

Go ahead!!............then meet with the pitfalls.............

ohwattagosiam

VIGILANT22 wrote: »

Go ahead!!............then meet with the pitfalls.............

I must be missing something here as surely any lender and the FSA would take a common sense approach and conclude that me buying a family members property, is not the same as a company that is snapping up tens/hundreds of properties. I have a vested interest in keeping a roof over his head, where as a company wouldn't really be bothered, and would be happy to turf them out in a year or so.

On this basis, I wouldn't have any issue with informing a lender of the reason why I'm buying the property.

Anyone else like to proffer there opinion?

Peter_L

ohwattagosiam wrote: »

I must be missing something here as surely any lender and the FSA would take a common sense approach and conclude that me buying a family members property, is not the same as a company that is snapping up tens/hundreds of properties. I have a vested interest in keeping a roof over his head, where as a company wouldn't really be bothered, and would be happy to turf them out in a year or so.

On this basis, I wouldn't have any issue with informing a lender of the reason why I'm buying the property.

Anyone else like to proffer there opinion?

It would appear that (correct me if I'm wrong) Vigilant22 seems to take great pleasure in trying to prove everybody wrong (see my post 2nd Mortgage) I believe (having learnt this recently) that he would be considered as a TROLL ???

Thrugelmir

For clarification are you proposing to buy the property at market value or for the value of the outstanding mortgage debt.

VIGILANT22

Peter_L wrote: »

It would appear that (correct me if I'm wrong) Vigilant22 seems to take great pleasure in trying to prove everybody wrong (see my post 2nd Mortgage) I believe (having learnt this recently) that he would be considered as a TROLL ???

Peter L....I will correct you, I am not a troll.....Just because you don't like what I post and regarding this thread I have added details of Sale and Rent Back schemes...this does not make me a troll.....

I guess I would be a God if I posted, yes go ahead no problems....as I said on an earlier post....long live forums..they help lots and lots of people......however......they also generate business for the professionals to clean up the mistakes of non-professionals giving "advice".....So you may not like what I say but do not call me a troll....:)