First time buyer - How would lender know

southernguy_2

Just a quick question

How would a mortgage lender know if you had previously owned a property. sold it and now wanted to be a first time buyer.

I always thought if you weren't moving from one mortgaged property to another

You could get away with calling yourself a first time buyer but not according to Martin's news

Martin's QUOTE in a nutshell you must never have bought or owned (ie even if you inherited) a leasehold or freehold property anywhere worldwide before – and in the case of buying jointly with someone else it only works if BOTH of you are first time buyers.

Who would hold the information? Land registry? Would not be on credit file if more than six years ago

Not planning on doing it just interested

Thanks

casper_g

There are a couple of other threads on this or closely related subjects. I think Martin is talking about the government's definition of an FTB for the purpose of the new stamp duty exemption. How they would know is a good question -- they might not, but do you want to risk having the HMRC down on you like a tonne of bricks?

Mortgage lender will have their own criteria for what an FTB is, which might well include you. It could be as broad as just meaning someone who doesn't have a house they need to sell to make the purchase, ie, the bottom of the chain.

sarah_elton

Are you talking about getting a FTB mortgage deal, or avoiding paying stamp duty?

For the mortgage, most banks class you as FTB if you don't currently own. I was confused by HSBC as they had homebuyer type "first time buyer" or "home mover". I was neither - have previously owned but now rent. They class me as FTB but you should check with the relevant bank.

For the stamp duty exemption, it's nothing whatsoever to do with the mortgage lender. When you buy, you complete a stamp duty return (or, your solicitor normally does on your behalf) that goes to HMRC, and pay the appropriate stamp duty. So from now, you'll declare whether or not you are a first time buyer. If you make a false declaration and the HMRC subsequently find out from the Land Registry, your credit history, etc, it'll be about as bad as lying on your tax return.

twokcc

So don't think you can get away with it( unless your a politician then you'll also not have to pay CGT as you'll be able to flip house to your main home before you sell it!)

southernguy_2

Thanks

As i said not planning on doing it

I currently rent and cannot afford to buy at the moment but did own a house over ten years ago.

Just always presumed if i was to buy again i would be classed as a first itme buyer again as not in a chain.

00ec25

twokcc wrote: »

( unless your a politician then you'll also not have to pay CGT as you'll be able to flip house to your main home before you sell it!)

in a vain attempt to stop urban myths from growing even worse, ANYONE who own 2 or more properies can "flip" which one they declare as the main home. This is and always has been tax law applicable to anyone not just MPs, it is known as making a CGT election

as for FTB buyer the question is anwsered above :

- re Stamp Duty - HMRC will check their records and prove you status in the time it takes to pres a button

- re mortgage this is defined however the lender sees fit

mbga9pgf

Would it be worth being made an example of for a few years inside picking the soap up for bubba?

Naah, sorry, not for me. Haggle the seller for 1% more or you walk. Far less pain if it goes wrong that way.

Arthritic_Toe

It boils down to the same thing as any other tax fraud. They may not find out, but would it be worth the sleepless nights?

Edit - just noticed this question was about mortgages not Stamp duty. The mortgage companies will flex the definition to their own advantage.

steve2909

southernguy wrote: »

Just a quick question

How would a mortgage lender know if you had previously owned a property. sold it and now wanted to be a first time buyer.

I always thought if you weren't moving from one mortgaged property to another

You could get away with calling yourself a first time buyer but not according to Martin's news

Martin's QUOTE in a nutshell you must never have bought or owned (ie even if you inherited) a leasehold or freehold property anywhere worldwide before – and in the case of buying jointly with someone else it only works if BOTH of you are first time buyers.

Who would hold the information? Land registry? Would not be on credit file if more than six years ago

Not planning on doing it just interested

Thanks

The mortgage lender may not know but the HMRC/solicitors will be able to find out before you exchange when they do their searches. If either find out then the mortgage company would be notified and therefore the offer in principle as such would become invaild. Also the solicitors would report you and could be charged with fraud.

Definately not worth the risk in my opinion

Richard_Webster

solicitors will be able to find out before you exchange when they do their searches. If either find out then the mortgage company would be notified and therefore the offer in principle as such would become invaild. Also the solicitors would report you and could be charged with fraud.

I'll say it again that the new HMRC rules about SDLT exemptions for FTBs buying for no more than £250K have nothing whatever to do with mortgages and First Time Buyers.

That out of the way let's turn to FTB mortgages branded as such by lenders.

I am not sure what searches a solicitor would do that revealed that a buyer had a property somewhere else or didn't comply with the lender's own FTB criteria in some other way. Perhaps it could be explained what what was being thought of.

More importantly you have to understand that we just get mortgage instructions from a lender. These will mention the price and the amount being loaned, interest rates and charges and if BTL will specifically say so, but typically will not say things like "This is only available to First Time Buyers". It may say that on the lender's advertising material but frankly that is not our business to read and unless the lender specifically alerts us in our mortgage instructions to the fact that the loan is only available to certain categories of people and that we should verify that our clients fall within those categories we would not see the need to investigate that kind of thing.

OK if the client says to us "Iv'e been very clever, I've got this FTB mortgage and I'm not supposed to have it because I didn't tell the lender about this other property that I have..." we would then have to tell the client that he then had a choice of either allowing us to reveal that information to the lender or us refusing to act further for either him or the lender. However this very rarely will happen because it is simply not our business to discuss various possible mortgage deals and the criteria that lenders employ to decide whether to give a person a loan on particular terms.

Obviously if someone is seeking to use the SDLT exemption and information comes to us that means that we know our client isn't eligible then we will have a duty to tell them that we cannot be a party to fraud on the HMRC. I suspect some sly people will use different solicitors who do not know their background and pretend that they are genuinely FTBs for the SDLT exemption. Usually we would have knowing that they were not, unless they tell us something that puts us on notice. All we can do is get them to sign a declaration that they comply.