Buy to let - stupid question!

chopperleeds16

May be a silly question. I live with my partner - don't have a mortgage. Thinking of buying to get on the ladder and then renting out. I know you are SUPPOSED to get a buy to let mortgage but know the deposit is much higher which makes this more or less an impossibilty. But what stops me buying then renting out a month later - who knows and if I get caught out what would be worse case scenario?

Thanks
Nick:beer:

Snow_Dog

Well usually the people that own the property like to know (your mortgage company)

chopperleeds16

Cheers but couldn't I just say to the mortgage company that I am a first time buyer (Which is true) then just get a normal repayment mortgage for example. That way i buy the house as though it would be me moving in but rent it out say a month down the line?

tomstickland

but know the deposit is much higher

This is to cover the increased risks of buy to let. So your truth economy is putting you at greater risk.

Snow_Dog

chopperleeds16 wrote: »

Cheers but couldn't I just say to the mortgage company that I am a first time buyer (Which is true) then just get a normal repayment mortgage for example. That way i buy the house as though it would be me moving in but rent it out say a month down the line?

Yup, you could do that technically, many people probably do.

And yes you would then get away with the cheaper deposit and lower IR.

And yes you would be breaking the terms of a contract and liable for prosecution.

It is a risk, only you can judge your level of risk taking.

Curious_Moose

Could also be insurance implications. Insurance companies need to know if it is owner occupied or rented out. If you told a porky to them and needed to make a claim, they could refuse to pay out, or inform the police if you'd told even more porkies trying to claim.

As for the mortgage lender, if they found out you had a residential mortgage and them rented out, they may say you had broken the terms of the loan and it had to be immediatley redeemed (with associated costs) and a new, buy-to-let mortgage taken out. Or they may just refuse point blank if they weren't happy about being fibbed to.

IMO, not worth the risk.

[Deleted User]

I know a guy that has 5 buy to lets all on normal mortgages by being economical with the truth. If you want to be honest then you can pay the fee afterwards and do the extra documentation to make it all above board this will still be cheaper then a BTL mortgage.

If your doing it to make money then youll be sadly disappointed, but i think its a good idea for those that cant afford a place to work towards an asset by living in a shared house and renting a house out they have a mortgage on elsewhere perhaps in a cheaper area further away from work.

Curv

If you get a 'normal' [residential] mortgage, you'll have to apply to your lender for 'consent to lease'. They can either approve or decline your application, based on their policy. If they approve, no problem. But if they decline and you still let the property you'll be in breach of your mortgage conditions, plus compromising any buildings and contents insurances in place, whether taken out by you or a tenant.

[Deleted User]

They rarely decline as they charge extra for this as i stated above. Also if they do decline then f**k em just dont tell them and the worst they can do if they find out is ask you to pay the mortgage back, never heard tehnm doing this tho

edit - obviously dont ask for the consent to let until after completion

beingjdc

If you're actually in Leeds (your name suggests it!), you'll be lucky to find anywhere that you can rent out for anything like enough to cover the mortgage, especially including repairs and marketing costs / letting agency fees...

[Deleted User]

beingjdc wrote: »

If you're actually in Leeds (your name suggests it!), you'll be lucky to find anywhere that you can rent out for anything like enough to cover the mortgage, especially including repairs and marketing costs / letting agency fees...

SAme with the rest of the country BTLing is a big waste of money at these prices, as per my post, but i think its more about developing an asset for OP then trying to break even.