[brighton'd]

Hi Can someone answer a question for me?
I have a friend who has 2 properties both mortgaged.
One is a BTL IO and the other repayment and main home.
She got the BTL based on potential rental income.Her main residence mortgage is at her absolute max in relation to salary so couldn't get 2nd place by normal means
But she has never let it and uses it M to F for work and her other house at the weekends
Is this allowed?
Why doesn't everyone do it!

[interestrateripoff]

brighton, on 05 March 2012 - 12:50 PM, said:

Hi Can someone answer a question for me?
I have a friend who has 2 properties both mortgaged.
One is a BTL IO and the other repayment and main home.
She got the BTL based on potential rental income.Her main residence mortgage is at her absolute max in relation to salary so couldn't get 2nd place by normal means
But she has never let it and uses it M to F for work and her other house at the weekends
Is this allowed?
Why doesn't everyone do it!

Because we aren't all stupid.

[brighton'd]

interestrateripoff, on 05 March 2012 - 01:04 PM, said:

Because we aren't all stupid.

I couldn't agree more!
They are up to their eyeballs paying for both
I just thought that maybe the bank would ask to see accounts etc but seems I was wrong

[LiveAndLetBuy]

brighton, on 05 March 2012 - 12:50 PM, said:

Hi Can someone answer a question for me?
I have a friend who has 2 properties both mortgaged.
One is a BTL IO and the other repayment and main home.
She got the BTL based on potential rental income.Her main residence mortgage is at her absolute max in relation to salary so couldn't get 2nd place by normal means
But she has never let it and uses it M to F for work and her other house at the weekends
Is this allowed?
Why doesn't everyone do it!

Sounds like one of those grey areas where if she manages to pay the mortgage(s) then everybody turns a blind eye. You definitely can't use a BTL mortgage on your main residence - but I guess she could claim that her main residence is the one where she spends her weekends.

Most people don't do this because for most people there's no reason to do this.

[brighton'd]

LiveAndLetBuy, on 05 March 2012 - 01:43 PM, said:

Sounds like one of those grey areas where if she manages to pay the mortgage(s) then everybody turns a blind eye. You definitely can't use a BTL mortgage on your main residence - but I guess she could claim that her main residence is the one where she spends her weekends.

Most people don't do this because for most people there's no reason to do this.

Yes thats what she does
She is now going to sell the weekend place and try to buy another
I can't believe that the bank will port that mortgage at her age 59 to another without checking out teh BTL
The btl started out IO at 800 a month it has been about 150 for the last 3 yrs but they have saved nothing and their
deal ends soon
I am just amazed that this is allowed

[brighton'd]

brighton, on 05 March 2012 - 01:57 PM, said:

Yes thats what she does
She is now going to sell the weekend place and try to buy another
I can't believe that the bank will port that mortgage at her age 59 to another without checking out teh BTL
The btl started out IO at 800 a month it has been about 150 for the last 3 yrs but they have saved nothing and their
deal ends soon
I am just amazed that this is allowed

So does this mean that if they were letting it and making a huge profit every month no one would no and so no tax?
I can't believe teh Inland revenue don't ask BTL for accounts?

[cheeznbreed]

brighton, on 05 March 2012 - 01:57 PM, said:

Yes thats what she does
She is now going to sell the weekend place and try to buy another
I can't believe that the bank will port that mortgage at her age 59 to another without checking out teh BTL
The btl started out IO at 800 a month it has been about 150 for the last 3 yrs but they have saved nothing and their
deal ends soon
I am just amazed that this is allowed

If at first you don't succeed, eh?

Her lender may put the brakes on her plan, if she's lucky..

[ader]

If you do a tax return you're asked about income from property (and any costs to offset).

But if you don't do a tax return.... (e.g. if your main job is paye and you don't declare the rest of your situation...)

I think everyone should have to do a tax return to weed out those evading tax

[LiveAndLetBuy]

brighton, on 05 March 2012 - 01:57 PM, said:

Yes thats what she does
She is now going to sell the weekend place and try to buy another
I can't believe that the bank will port that mortgage at her age 59 to another without checking out teh BTL
The btl started out IO at 800 a month it has been about 150 for the last 3 yrs but they have saved nothing and their
deal ends soon
I am just amazed that this is allowed

I guess that if she doesn't mention the BTL outgoings on the new mortgage application, and she's up to date with her payments, then the bank won't look any further. She'd be committing fraud and it may catch up with her down the line, but that's the chance you take*.

(*Given that the banks have been told not to pursue distressed mortgages it's not a bad gamble)

[brighton'd]

cheeznbreed, on 05 March 2012 - 02:04 PM, said:

If at first you don't succeed, eh?

Her lender may put the brakes on her plan, if she's lucky..

Do you think so?
She thinks I am over cautious!
The main house is about 60% mortgage 40% equity bought in 2008
They plan to sell and port the loan to another property same LTV ish I think just another area
I am aghast that they can as one is retired and other does work but age is a factor
I am more worried about them than anything else as these houses are all they have got no savings etc

[LiveAndLetBuy]

brighton, on 05 March 2012 - 02:03 PM, said:

So does this mean that if they were letting it and making a huge profit every month no one would no and so no tax?
I can't believe teh Inland revenue don't ask BTL for accounts?

As another poster said, they do ask for you to declare your accounts on your tax return. However most people who do declare the income will offset it against mortgage interest payments. Many don't bother and commit fraud (no doubt feeling somewhat justified because everybody else seems to be committing fraud in one way or another)

[The Ayatollah Buggeri]

ader, on 05 March 2012 - 02:13 PM, said:

But if you don't do a tax return.... (e.g. if your main job is paye and you don't declare the rest of your situation...)

I think everyone should have to do a tax return to weed out those evading tax

Veering OT a little, but the PAYE system is fundamentally obsolete. It was designed on the assumption that everyone stays in the same full-time job for life, and generates disproportionate bureaucracy and inaccuracy whenever anyone changes jobs, does two or more part-time jobs simulantaneously with PAYE on more than one, does one PAYE job plus some self-employed work in addition to it (which is my situation) or is entirely self-employed. Let's just have done with it, remove the obligation of employers to police the tax system (which would reduce their overheads and thus stimulate job creation) and have everyone do their own tax returns.

[Lennon]

The Ayatollah Buggeri, on 05 March 2012 - 02:47 PM, said:

Veering OT a little, but the PAYE system is fundamentally obsolete. It was designed on the assumption that everyone stays in the same full-time job for life, and generates disproportionate bureaucracy and inaccuracy whenever anyone changes jobs, does two or more part-time jobs simulantaneously with PAYE on more than one, does one PAYE job plus some self-employed work in addition to it (which is my situation) or is entirely self-employed. Let's just have done with it, remove the obligation of employers to police the tax system (which would reduce their overheads and thus stimulate job creation) and have everyone do their own tax returns.

Indeed - what ever happened to Osborne's "Office of Tax Simplification" - have they come out with anything yet? This is one of those things that in the long run would be a huge simplification, but has a large 'hurdle' for 2-3 years whilst everyone changes systems and gets themselves sorted out.

You would think that merging Employers NI, Employees NI and Income Tax would be a quick win for simplification, but seemingly not... Let alone the insane obvious winners for simplicity, but not politically acceptable (scrap the elderly winter fuel allowance, and add exactly the same amount to the pension)

[brighton'd]

I am amazed at this
I don't know how the banks decide who and how much to lend
These people could get into hot water here
I have spoken to them but I don't think they get it
The agents have told them the house has gone up by about 11% since they bought it whereas land registry says they have dropped there by 10%
I assume the bank check you out again?
Can retired people and those 6 yrs from retirement still borrow £££££££££££?
Thanks for all the info I plan to speak to them again

[kenzdawg]

125 percent rent over mortgage with accounts to prove it is usually a requirement of a btw mortgage. Astonishing if the bank has never checked. But if it became an issue could n`t she rent the second flat out to friend or family then sublet a room from her "tenant", I`m assuming it`s a two bed. That would square the accounts with the bank and HMRC surely.