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Hip to be bear

Mew, Liar Loan And Io Mortgage In A Neat Little Box!

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I posted this on the anecdotals forum, but thought I might air it here too:

Having a chat with my Brother in Law at the weekend. When we arrived at their house to see the new baby, he was on the phone to a mortgage broker.............My ears were twitching under my HPC hat.

THey are looking to MEW for a new car. They have a second property on an IO mortgage which they rent out. He lived in it several years ago and has rented it out since. They had the opportunity to sell it in late 2007, but his wife convinced him not too without doing it up. Having spent a lot of time and money on the new kitchen and bathroom as the market turned, they couldn't sell for what they wanted and eventually rented it out again.

As he and his wife were discussing it I gleaned that the mortgage company does not know that it is being rented out. If they come clean on that they will lose the good mortgage deal that they have at the moment.

THe real meaty bit for me was what their C&G mortgage arranger had told them (presumably when they last remortgaged). His advice at the time was not to tell them that the property was rented if they wanted the best deal on offer. I have heard of liar loans where the mortgage broker slips one past the lender. This is the first time that I have heard of a UK high street lender's own employee slipping a cheeky one past his bosses.

Does anyone with greater knowledge of the mortgage market or banks have any light to shed on this????

Eric, any thoughts?

Shao Khan, this might be one for you...

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I posted this on the anecdotals forum, but thought I might air it here too:

Having a chat with my Brother in Law at the weekend. When we arrived at their house to see the new baby, he was on the phone to a mortgage broker.............My ears were twitching under my HPC hat.

THey are looking to MEW for a new car. They have a second property on an IO mortgage which they rent out. He lived in it several years ago and has rented it out since. They had the opportunity to sell it in late 2007, but his wife convinced him not too without doing it up. Having spent a lot of time and money on the new kitchen and bathroom as the market turned, they couldn't sell for what they wanted and eventually rented it out again.

As he and his wife were discussing it I gleaned that the mortgage company does not know that it is being rented out. If they come clean on that they will lose the good mortgage deal that they have at the moment.

THe real meaty bit for me was what their C&G mortgage arranger had told them (presumably when they last remortgaged). His advice at the time was not to tell them that the property was rented if they wanted the best deal on offer. I have heard of liar loans where the mortgage broker slips one past the lender. This is the first time that I have heard of a UK high street lender's own employee slipping a cheeky one past his bosses.

Does anyone with greater knowledge of the mortgage market or banks have any light to shed on this????

Eric, any thoughts?

Shao Khan, this might be one for you...

They need to tell their insurance brokers as well. If they don't any claim could be invalid (buildings, not contents).

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Landlords who use owner occupied mortgages committing fraud

Landlords that are tempted to take out an owner-occupier mortage as a way of securing more benificial terms to purchase a buy-to-let property are committing fraud according to the industry organisation The Council of Mortgage Lenders.

Landlords tenants disadvantaged.

It could also put the landlord's tenants at a disadvantage should the landlord stop paying the mortgage.

This is because specialist buy-to-let mortgage products have a mechanism in place to accept tenants' rent in place of mortgage payments which negates the need for court action and the possibility of repossession.

An owner-occupier mortgage on a rented property can lead to problems for the tenant if the landlord fails to keep up repayments and also increases the risk for the lender, with the CML describing such behaviour as "irresponsible".

"Everyone sympathises with those tenants who are paying their rent, and fulfilling their obligations, but who find that their landlord has not been paying their mortgage and not told their lender that they are renting out the property," said director general Michael Coogan.

"Good tenants should not be disadvantaged, and nor should lenders, by the irresponsible behaviour of a small minority of landlords. We look forward to working with the government and advice agencies on effective measures to help the modest number of tenants affected."

CIFAS warning

The other risk to landlords of trying to obtain a owner occupation mortgage is an impairment of their credit rating should they be found out. This is activated by a lender who identifies a borrower trying to access funds fraudently potentially including the borrowers details on the CIFAS register. This warning will remain on a landlords credit file and be shared between other CIFAS members. Lenders can take this warning into account when looking to advance funds to the landlord in future.

Edited by Bloo Loo

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