Would i be in trouble if - I got a FT buyer mortgage and rented out the property??

thebrow2000

I am after a property to rent out, but I can not afford a 15% desposit for a buy to let mortgage

As I am a first time buyer, i will get a FT buyer mortgage and then rent out the property without living there.

Is this illegal?

Would the bank take a negative and sell the property if they found out?

Do you pay any taxes on a buy-to-let?

I plan to rent it out to my company with rental agreement for a guaranteed 2 years - so all payments covered.

What do you think??

Thank you

hornetgirl

I think if you can't afford it you shouldn't be doing it.

rebeccaj

I'm sure you will find that it is in breach of the T&Cs of the mortgage, and as such yes, you would be in trouble.

real1314

T&C's on the mortgage and the buildings insurance. mortgage co will want to see buildings insr, and if you go with owner occ insr, you'll have breached the insr t&c. If you go with landlord's insr, mortgage co will want to know why.

Ivrytwr3

I did exactly that in Jan 06. Make sure you check the t&c of your mortgage though as some will want to move you to a buy to let mortgage and some will will want a fee to get a "consent to let" from them. With regards to company lets, you will probably finds that your residential mortgage will not allow this.

No, it's not illegal, you won't be brought to charge by the police, but you do run the risk of the bank recovering the full amount owed immediately if caught.

Now, i went the full honesty approach and have the consent to let etc, but a friend of mine has been doing this for about 6 years and neither the mortgage provider or taxman know about it and she hasn't been caught; yet.

Rick62

Yes it is illegal, its called obtaining money by deception and is a form of fraud.

Its a shame that banks are not being more rigerous over fraud because part of the rise in prices of property is peoples brazen idea that obtaining mortgages by false statements is fine.

Ivrytwr3

How is it illegal? He's breached his mortgage agreement by allowing tenants, nothing more. And if worse comes to worse he can always plead ignorance.

I was forced into letting my property due to work commitments, there are so many other factors that could enable a borrower to need to let.

thebrow2000

Its always interesting to read the catty comment and their is alway some jealous over buy to let. Esp those ppl who believe a house should be there to live in and not just a money making scheme.

So in response to the questions.

1. I can afford the desposit but not 15%

2. As my company needs rooms for the workers its is a guaranteed rent. Now that is an opportunity to good to miss.

3. I plan to convert the garage to a small flat - Would this be enough to satisfy the bank. I only plan to stay maybe twice a week?

4. What are the tax impications? This would be my first house so surely nothing??

Thank you all for your views

thebrow2000

real1314 wrote:

T&C's on the mortgage and the buildings insurance. mortgage co will want to see buildings insr, and if you go with owner occ insr, you'll have breached the insr t&c. If you go with landlord's insr, mortgage co will want to know why.

Does this mean I will not be insured?

thebrow2000

Rick62 wrote:

Yes it is illegal, its called obtaining money by deception and is a form of fraud.

Its a shame that banks are not being more rigerous over fraud because part of the rise in prices of property is peoples brazen idea that obtaining mortgages by false statements is fine.

Im purely trying to get on the property ladder

seven-day-weekend

Your rental income will be added onto your ordinary income (minus mortgage interest repayments) and taxed as income.

You will need plannning permission if the garage is to be a seprate flat. If it is just a bedroom/bathroom you won't.

Ask your lenders if they will give you permission to rent. If they do not object they will give you a formal agreement and then you will be in the clear. It will probably cost a few hundred. I did this with a flat I had on an ordinary domestic mortgage and they inserted a clause on the bottom to say it could be rented on an assured shorthold tenancy providing each tenancy was for no longer than a year.

Make sure you have appropriate insurance/gas certificates etc.

It is certainly not illegal if you are upfront about it and have the appropriate permissions.