stuck between a rock and a hard place

turtleneck

I rented out my flat without realising all the implications...

Now I find I can't put things right, I have a residential mortgage and have been refused consent to let. I have also been refused a buy to let mortgage for the following reasons:

- my income is under 25,000
- this is my only property
- my lease is under 70 years

So now it seems I am stuck with the mortgage I have despite having nearly 50% equity in the property. My only options appear to be:

- sell the property with tenants in situ, maybe a new AST to keep them happy?
- serve a s22 to evict tenants, then sell or live there (don't particularly want to live there myself)
- carry on as i am hoping i don't get found out

Funnily enough a bank employee friend, in compliance believe it or not, suggested the latter, telling me that it wont be a problem as long as the mortgage gets paid!

However I still feel a bit uneasy and wondering what to do, would like to hear your views on this!

Thrugelmir

Personally. Move back into the property, extend the lease and sell it.

ACG

A little bit of knowledge is worse than no knowledge at all as they think they know it all.

Is your friend going to sort out the issues if the lender finds out?

If the lender finds out, they may give you 30 days notice and call in the loan. If there is 50% equity in the property, why not sell it and rid yourself of the problem?

Yorkie1

Thrugelmir wrote: »

Personally. Move back into the property, extend the lease and sell it.

This bit is important.

The shorter the lease gets, the harder it will be to sell and the lower the price you'll get for it - so your equity will reduce.

It needs to be sorted out sooner rather than later. If you do plan on selling it, then at the very least get things underway because otherwise the new owner might have to wait 2 years before getting the process underway, at greater expense.

gazter

ACG wrote: »

If the lender finds out, they may give you 30 days notice and call in the loan. If there is 50% equity in the property, why not sell it and rid yourself of the problem?

Are there examples of this happening to small time people with a second of third property?

And again, with criminal? Not subscribing to the terms and conditions of the mortgage are unlikely to fall into the criminal sphere.

I use my phone and broadband for business purposes, i even claim them back as business expenses on my tax forms, yet i am on residential tariffs for both products. Should I surrender myself at a police station?

(re reading this sounds like i'm having a go at you.. Not, just asking the general questions)

ACG

Who said criminal?
What has having a 2nd and third property got to do with anything? You can have any many properties as your income will support... you can not rent them out however without CTL.

But to answer your question yes there are examples. I have worked for a bank who has done it... I had an earful off the customer.

brit1234

gazter wrote: »

And again, with criminal? Not subscribing to the terms and conditions of the mortgage are unlikely to fall into the criminal sphere.

Bad advice
Fraud by failing to disclose information

A person is in breach of this section if he—
(a)dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and
(b)intends, by failing to disclose the information—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.


http://www.legislation.gov.uk/ukpga/2006/35/section/3


Yes it is a criminal offence, do the right thing and get it sorted legally.

Thrugelmir

gazter wrote: »

I use my phone and broadband for business purposes, i even claim them back as business expenses on my tax forms, yet i am on residential tariffs for both products. Should I surrender myself at a police station?

That's irrelevant. Mortgage terms and conditions are quite specific as to what constitutes a breach.

turtleneck

Thanks for the advice. So it seems like I am not fit to be a buy-to-let-tor, mainly due to earning just under £25k and not having another property that I own and live in. So it seems buy to let is only for those on high incomes and those who have an owned property already.

GMS

turtleneck wrote: »

Thanks for the advice. So it seems like I am not fit to be a buy-to-let-tor, mainly due to earning just under £25k and not having another property that I own and live in. So it seems buy to let is only for those on high incomes and those who have an owned property already.

Have you actually spoken to a broker?


You have had 2 threads about this and have now decided it can't be done.


There are lenders who would consider the scenario. Whether you would fit or not is a different matter but it could be explored.

Thrugelmir

turtleneck wrote: »

So it seems like I am not fit to be a buy-to-let-tor, mainly due to earning just under £25k and not having another property that I own and live in. So it seems buy to let is only for those on high incomes and those who have an owned property already.

Anything else is little more than gambling with somebody elses money.

Owning 2 mortgages properties on a £25k income carries enormous potential downside risk.