What actually happens if you rent out your property and don't tell the lender?

moneysaver45

Running_laps wrote:

The big difference betweern BTL and a nromal mortgage won't be the profit margin but will be the allowance for default. If you own a BTL property and you can no longer afford the mortgage you simply stop paying and let it get repossessed. if its your own home you will; make far greater sacrifices to avoid repossession and therefore the default rate will be lower meaning they can offer a cheaper interest rate to borrowers.

I don't accept that there's an increased risk of default (or any risk at all, really), so I'm not prepared to pay the higher costs. The risk of default is actually greater with a higher interest rate as it means you have to find more money per month than you would with a lower interest rate. No, your argument doesn't stack up.

Thrugelmir wrote:

As a major shareholder in 2 of the UK's major banks I have a vested interest.

Why should I subsidise someone who thinks that we still live in the realms of the Wild West.

I seriously doubt you're a 'major shareholder' in the business sense of the word. Do you own 3% or more in 2 of the UK's major banks? That would make you worth a few hundred million.

As for 'subsidising'- why should my tax money have been spent to bail out your banks, who have no one to blame but themselves for poor financial dealings? Why should I have to subsidise people on benefits with 8 kids who have no intention of ever getting a job? Why should I have to pay tax money for foreign aid? There's plenty of things I'm subsidising that I don't like, but I just have to suck it up. Sure, you could say 'if you don't like it then leave the country'. Well I say the same to you- sell your shares if you don't like the idea of subsidising others (not that this is a true subsidy, it's just taking away your ridiculous profit margin and replacing it with something more reasonable).

The interest rates that banks charge are outrageous. A 0.5% Bank of England base rate, yet they charge 4% on BTL mortgages? I make that a profit of 700%. Knocking this down to 2.5% still means they're making crazy profits of 400%, but it is a little more reasonable.

DpchMd

Proxy wrote: »

Probably a good time to start my "how to rob a bank" thread then, seeing as asking for advice is fine whether it's legal or not.

If you're curious about the implications of robbing a bank then sure, go ahead and post a thread. Hopefully, once armed with the facts, you'll decide that robbing a bank is a bad idea.

However, if you decide to go ahead and rob the bank even though you are aware of the consequences, you should be prepared for the punishment.

Either way, it's entirely your choice and I have no right to judge you.

jjlandlord

Thrugelmir wrote: »

As a major shareholder in 2 of the UK's major banks I have a vested interest.

Why should I subsidise someone who thinks that we still live in the realms of the Wild West.

Please let me know when you receive your dividends/bonus...
People are gullible, that's how politicians make their living.

My point being that banks are multi-billion pounds organizations focused on making money and with armies of specialists.
Don't worry that if people renting out their homes without btl/consent to let was costing them a significant amount they would seriously act on it.
Still, they must be very grateful that the general public takes their interests at heart. I don't think they'll remember it next time they decide to charge you for something, though.

ognum

I haven't bothered to read the whole thread because I think the OP is just a wind up merchant.

The one thing I think is important is that you get the right insurance for yourself and your tenants you can't do this without being honest.

frankly what you do to yourself is fine its your choice but be very careful to protect your tenants

Thrugelmir

jjlandlord wrote: »

Please let me know when you receive your dividends/bonus...

I prefer to view the situation currently as a reducing exposure. Hester so far has shrunk RBS's balance sheet by £700 billion. Yet still has some way to go. NRAM still holds some £85 billion of mortgage debt, LloydsHBOS some £336 billion. So we are far far from being out of the woods. If Europe takes a major economic turn for the worse..........

Thrugelmir

moneysaver45 wrote: »

The interest rates that banks charge are outrageous. A 0.5% Bank of England base rate, yet they charge 4% on BTL mortgages? I make that a profit of 700%.

Simply put they don't. Banks don't borrow from the BOE. Bulk of funding comes from the wholesale market. I deposit my money in fixed term ISA's offering over 4%. So my bank has to charge a higher rate than this to make a profit.

Werdnal

ognum wrote: »

I haven't bothered to read the whole thread because I think the OP is just a wind up merchant.

The one thing I think is important is that you get the right insurance for yourself and your tenants you can't do this without being honest.

frankly what you do to yourself is fine its your choice but be very careful to protect your tenants

Ahh but OP already said his tenant is a "family member" who he is going to get in on his little mortgage scam plan, so I bet he will also convince them that insurance and all the other legal stuff costs too much - can't have him eating into his rental profit for all the unnecessary rules and regs that come with letting now can we ? :rotfl:

MissMoneypenny

Mortgage Fraud

By Jonathan Lennon, Barrister and Aziz Rahman, Solicitor, from insidetime issue November 2011

Its only when the tide goes out that you learn who’s been swimming naked. Warren Buffet

It was shortly after the credit crunch hit us that we noticed a sharp increase in mortgage fraud prosecutions. That was simply because those schemes had been banking on the ever increasing property market. When the mortgage market collapsed and property values dropped banks were exposed and found a great deal of the money it had loaned over the boom years were not as firmly secured as they had been led to believe – this was especially true in the buy-to-let market.
http://www.insidetime.org/articleview.asp?a=1087&c=mortgage_fraud

chewback

Take out the mortgage on a resi and then get consent to let it will be safer. I am totally on your side about the robbing banks though. How much have they taken from all of us and people still defend them!!!!