FTB - No job can we get Buy To Let with 25% Deposit?

experience

My girlfriend is on maternity leave and instead of returning to her job next year is planning on starting her own business so she can spend more time with the baby.

We want to buy our own home and have £30k but realise we wont be able to get a normal mortgage, her only income being maternity pay and me being self employed with low wages for the last 2 years due to the recession.

Would we be able to get a Buy To Let mortgage in her name upto £120k with the 25% deposit we've got?

Looking at the sums we can easily afford it - the mortgage would be cheaper than what we're currently paying on rent by over £100 a month.

The only thing is we'd have to tell a white lie saying we're planning on renting it out - however we'd be living in it ourselves :silenced:

GMS

Little White Lie = Mortgage Fraud.

You are attempting to bypass an affordability calculation.

Property would not be insured as would not have a tenant in it and you would be in breach of mortgage conditions so lender could call in the mortgage. You are not able to get a residential mortgage so would lose the property and most of, if not all of your deposit.

phlash

Ermmm

It is much harder to get a BTL mortgage than a personal one.

If you can't get a personal one, then as a rule of thumb don't bother looking at BTL.

With regard to the white lie, it's simply a stupid idea, probably conceived at the pub or whilst watching homes under the hammer.

A BTL lender will normally require a % rental cover on a set interest rate mortgage, and then require you to have a sufficient salary to cover payments if you do not have tenants. By living in it and paying the mortgage yourselves (i.e. not getting rent for it) you are reducing your income and do not, in that scenario, have a back up.

Simply put, it is not a white lie, but mortgage fraud.

MrChips

This may be a stupid question, but if you think you will be accepted for a £120k BTL mortgage with a 25% deposit, why don't you think you could get a standard mortgage on the same terms?

_Andy_

Oh great, another fraud thread. Silly silly silly.

GMS

MrChips wrote: »

This may be a stupid question, but if you think you will be accepted for a £120k BTL mortgage with a 25% deposit, why don't you think you could get a standard mortgage on the same terms?

Because he has low wages. A Buy to Let is an attempt to bypass the need for income proof.

Misguided at best, fraud at worst

MrChips

Do you not need to prove your income for BTL? Or is the assumed rental income taken as "earnings" instead?

If I was lending on a BTL, I'd want to be confident the landlord could pay the mortgage through several months of initial void periods...

GMS

MrChips wrote: »

Do you not need to prove your income for BTL? Or is the assumed rental income taken as "earnings" instead?

If I was lending on a BTL, I'd want to be confident the landlord could pay the mortgage through several months of initial void periods...

It varies from lender to lender. Some want to see income, some ask for a figure and others do not want any income details.

A Buy to Let is required to be self funding, i.e rent covers mortgage plus a percentage. 125% of mortgage as rent is about the normal.

herbiesjp

As an adviser I would ALWAYS want proof of income from my clients.

I have to satisfy both myself and the FSA that the mortgage is affordable now and in the future.

Irrespective of whether or not a lender asks for that proof I will always have it on file.

experience

If the mortgage & house is solely in my girlfriends name and she rents it out to me then technically that is not fraudulant.

No different to you buying a house to rent to friends/brother/sister .. personally i know quite a few people who rent houses to friends & family. Very common to see a uni student get a BTL, live in it whilst renting the other rooms out to friends for the term of their 4yrs at uni and then sell it when they leave uni

We're not married and i can easily be the named tennant, i can easily afford the rent so i dont see the issue. The 25% covers the risk for the lender - they also charge a higher interest rate so make more profit on repayments and aslong as they get their repayments whats the problem?

We havnt obtained the money fraudulantly, lied/fluctuated income, used false credentials/wage slips/bank accounts etc..

Back to the Point - if my girlfriend contacts a mortgage broker with a 25% deposit stating she is on a low income and wants a house to let out will a BTL be feasible?

GMS

If your girlfriend is occuping a Buy to Let it is fraudulent.

Sorry nobody has condoned it, you are not the first to come on the forum looking for the answer you want.

You are avoiding proving income so you know it to be incorrect.

As for renting to family there are implications with this. Lender probably unaware.

Any broker worth their salt will not asist you with this.