Our lips are sealed?

by Readers Question

13:07 PM, 16th September 2014
About 4 years ago

Our lips are sealed?

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Our lips are sealed?

After 7 years living abroad we are moving back to the UK in the next couple of months. Before we left in July 2007, in the dim distant days of self certified buy to lets and sub prime lending, we transferred the mortgage on our home from a repayment to a buy to let mortgage.

Since then we have been lucky in that the property has been let out on a continuous basis for the past 7 years. We have set a goal of moving back to the UK for a max of 2 years to get our finances sorted out and then to sell the property and move back abroad.

We are realistic enough to know that we will never be able to remortgage the property given the LTV, our ages, early 50s, and being self employed so selling in the next two years will, at least, give us some equity.

Our dilemma is whether to tell our buy to let provider that we intend to move back into our property or to keep our lips sealed? My sense now is that being honest with financial institutions nowadays, especially dodgy sub prime lenders, could be a recipe for disaster.

Our own lender doesn’t even exist now as a lender having sold their mortgage book on a few years ago. If we are savvy and don’t let the whole world know our change of address I am mined to not say anything and hope for the best.

A recent health scare has dented my confidence a bit so where I could have dealt with issues like this without too much stress in the past I now find myself preoccupied with trying to work out what to do for the best.

Any thoughts, similar experiences or advice would be greatly received!

PaulLips



Comments

Neil Patterson

13:18 PM, 16th September 2014
About 4 years ago

Hi Paul,

We have had many readers articles asking if they should inform the lender that the property is now let, or their main residence against the mortgage terms and conditions.

However the big difference is that they have already moved in, or let it out, and are now in a financial pickle if the lenders finds out, which they will given enough time.

It is possible, if you ask, that the lender could give you permission to move in if you inform them you are looking to sell and repay the loan asap.

However why not just simply keep the property let and rent your own residence until you can sell and repay the loan?

Deliberately misleading a lender will get you black listed on their industry "Hunter Match" search and cause you all sorts of problems going forwards if you need to borrow.

We have had too many stories of people getting into a difficult situation and it would be great to stop one before it happens 🙂

All BankersAreBarstewards Smith

13:28 PM, 16th September 2014
About 4 years ago

I think Neil has, inevitably, had to give the "official" line. In truth I suspect there are many many thousands of folks who have not told lenders the truth the whole truth and nothing but the truth - especially with regards to BTL. If you are moving back here temporarily, why not use a relative's address for postal communications as a "holiday visit contact address". (Some lenders databases - especially those that include clients who have been sold on - may not be as efficient as you might think. )

If lenders get paid regularly why should they look at your file ? In any case, your plans can always change at the drop of a hat if any correspondence is sent to you by a suspicious lender.

John Constant

13:53 PM, 16th September 2014
About 4 years ago

I'm with Neil on this one. Why not go to rented yourself, using the legitimate rental income received to subsidise the rent that you will pay.
If you move back in, you will forever be looking over your shoulder, in case your secret gets out. Don't let that stress make things worse for you.

Mike McDonagh

14:12 PM, 16th September 2014
About 4 years ago

Have you considered selling the property now to a buy to let landlord who will give you a 2 year tenancy

John Constant

14:21 PM, 16th September 2014
About 4 years ago

Reply to the comment left by "Mike McDonagh" at "16/09/2014 - 14:12":

Mike, this is called a "Sale and Rent back" situation. This type of sale has come into disrepute in recent years; the usual purchase price is between 20 and 30% lower than the open market value. Such sales fall into a category of their own, as far as the FCA are concerned, and this market, is quite highly regulated. For the loss of equity alone, not a good idea.

All BankersAreBarstewards Smith

18:41 PM, 16th September 2014
About 4 years ago

Sale And Rent Back is illegal now - unless you use an FCA authorised company - I don't even know if there are any players left in this market as FCA imposed so many conditions on trading in this manner.

Michael Barnes

18:54 PM, 16th September 2014
About 4 years ago

ask your lender if you can live there for a couple of years whilst you sort out the sale.

If they say 'yes', then you have no problem.

If they say 'no', then rent somewhere or stay with friends or relatives.

It is always best to do things properly imho.

N S

20:09 PM, 16th September 2014
About 4 years ago

Dress it up how you like - assuming that there is a clause in your buy to let mortgage that you can't live there, this is clear cut, black and white fraud. There may be a small risk of this ever being found out - but if it were very serious consequences for you. And while it may seem innocuous "white collar" fraud is never a victimless crime. Banks work out their buy-to-let rates etc on the basis of the risk of their loans - a number of variables determine this, but one is the risk calculated according to rental value - which is an entirely different metric to the risk profile for owner occupied. If you are found out then this will somehow be fed into a system to increase the risk of buy-to-let loans. No doubt in this instance this would be a teeny weeny figure with no real impact - but nonetheless if everyone did it we'd be in a bit of a bother. You talk about "dodgy sub prime lenders" being the reason why you won't be honest - I think that sounds like a bit of a buck pass. If you do commit fraud I fear that the buck will sit with you...That's kind of like saying a corrupt policeman punched a prisoner so it's okay if I punch someone. You don't sound like an inherently dodgy person - so I'd suggest going down the honest route.

Paul Raynor

12:51 PM, 17th September 2014
About 4 years ago

Reply to the comment left by "All BankersAreBarstewards Smith" at "16/09/2014 - 13:28":

hi there,
thanks for the comment. You may be right about inefficient systems.I have written twice with our new address but this has never been updated. Living in a small town though our postie knows us so still hands us our mail from our old address! Given the feedback my thoughts are to get back for 6 months, sell, pay off the mortgage and get back here so that I do not have to mess around with my residency. Lifes too short! Paul

Mark Alexander

22:07 PM, 17th September 2014
About 4 years ago

Reply to the comment left by "N S" at "16/09/2014 - 20:09":

For the record, breach of contract is not fraud.

For this to stand a chance of being fraud it would have to be proven, beyond reasonable doubt, that it was always Paul's intention to live in the property.

The worst that could happen if Paul was to breach contract is that the loan could be called in. Nevertheless, I concur with all the advice offered by those who say that Paul should seek permission to live in the property and ... if declined .... that he should use the rental income received from the let property to rent somewhere else for himself.
.

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