Mortgage fraud surges according to Experian

I hadnt realise that residential mortgages being used to fund buy-to-let purchases is fraudulent - been doing it for 20 years. Beats blowing it on holidays.

If one bothers to read the conditions for consumer credit facilities you will find they all ban them from being used for ANY business purpose.
NOBODY takes the slightest notice of that.
How many people have remortgaged on their PPR to raise a deposit for a BTL property.
They put the money in a savings account and then 6 months later they purchase.
Technically fraud, but everyone does it.
Credit cards used for business purposes, everyone does it; breach of conditions.
Lots of people cannot obtain a long term IO only residential mortgage, so they just obtain a BTL mortgage.
Their 'tenant' vacates once the initial 6 month tenancy has elapsed.and they have to move in, job done.
Or they don't move in and obtain another 'tenant'.
Providing the mortgage is paid who will ever know!?
You just have to ensure you have a separate address for post, like your Mum's.
Or arrange to collect it from a PO personally.
This prevents the lender seeing any bank account etc showing as the BTL mortgage address.
A little inconvenient, but the big prize is , you got the mortgage you needed.
I can see lots of FTB becoming BTL LL going for the Manchester BS deal and 'renting' out!!

There is nothing wrong with the principals of remortgaging a private residence to raise deposits for buy to let so long as the purpose of the loan is declared to the mortgage lender. As for the other points, a crime is still a crime whether you get caught or not. Most criminals commit crimes in the belief they will not get caught. It is very clear from these figures provided by Experian that some do. The maximum penalty for mortgage fraud is 14 years in prison.

Absolutely you are CORRECT Mark.
However if one declared the true purpose of a mortgage advance, say for business investment purposes or in this case to purchase a BTL property, the application would be refused as most residential mortgages specifically prohibit any such advance monies being spent on anything other than consumer purposes.
So you can spend the money on a boob job,spend it on a car, spend it on a holiday but you can't spend it on a deposit for an investement property.
So most LL using their equity in their PPR for purchasing BTL property have all been; how shall we say..............economical with the truth!
The same goes for LL using credit card balance transfers for deposits.
All these are in breach of terms and conditions
Everybody does it, which technically makes them ALL criminals.
So it is pointless stating the true purpose of such a mortgage advance as it is then on record and any future applications will be scrutinsed even further.
I am afraid if you want to get into property you have to be economical with the truth, unless you have vast pots of money.
Most little LL are not in this position and they have to utilise all means to use any facilities they have to try and purchase BTL property.
For most this means credit card, personal loans, and remortgaging their PPR.
All these methods potentilally criminalise the applicant.
That is the reality of the situation whether one likes it or not.
Very few credit card, personal loan or mortgage companies will ever ascertain what those comsumer funds were actually spent on.
Quite frankly they are not bothered aslong as you keep the payments up.
They are required to have these conditions as it is all part of the regulatory framework.
In life there have to be many grey areas if you wish to get ahead.
If you don't the poor will remain poor and the rich will just get richer.
The little man has to do something to address the imbalance.
This is done via consumer based credit facilities which will always be technically illegal.
This is just the way things are and WILL continue to be.
Many entrepneurs have started businesses on credit cards and personal loans.
Technically they are all criminals
One just has to be realistic and accept that not everything will be carried out in strict conformity with regulations.

I very much doubt that when you applied for your remortgage you stated the true purpose of the advance.
Had you done so then you would have been most unlikely to have received the funds.
All you have done is basically lied like millions of people did when they were driving round in their house extensions!!
You would have thought the best use a remortgage could be used for would be for a future property; which was the sensible thing you didTechnically your are a criminal, but probably a rich one on the basis of shrewd investment in rental properties!!
The banks though are stupid.

Paul - capital raising to fund buy to let deposits is a perfectly acceptable "purpose of loan" for several mortgage lenders. A good mortgage broker will know which ones they are. What you are advocating is to commit mortgage fraud, the maximum penalty for which is 14 years. I do not recommend anybody reading your post to follow your advice for this reason. Anybody needing advice on which lenders to approach without the need to tell lies and risk imprisonment should call my business partner, Neil Patterson, on 01603 489118

No I absolutely agree with you; if there are brokers out there that know the lenders that will allow remortgage on a PPR for investment purposes then fine if your mortgage happens to be with that provider.
If it isn't what do you do!?
I am not for one moment advising anyone not to make a full declaration as to the purpose for the remortgage, I am conjecturing that probably millions of people have NOT stated the true reason.
Totally wrong and fraudulent; I couldn't agree more; but everybody has done and is doing it!
Of course any person should seek the legitimate and legal way to do things.
Unfortunately due to restrictive circumstances with lenders it is just not possible.
I am not advocating an illegal course of action
;but discussing what millions of borrowers do on a daily basis.
The legitimate route to financing a BTL is one I would wholeheartedly endorse as the ONLY way it should be done.
Trouble is this way does not work in the majority of cases, so what to do.
Remember as soon as data is down on an application form all potential lenders will see this via the national hunter system.
Therefore you need to know what a lender's position is for what you are seeking before you put pen to paper.
It is called DD and then yo may make your necessary judgement as to how you wish to proceed.
I would not advocate any particular course of action, but suggest you need to be fully informed as to the effects you have on yourself by making relevant applications.
The CORRECT way is always the legal way.
Should anyone wish to be at variance to that philosophy that is their choice' but also their lookout.
I recommend your course of action which is always and necessarily has to be the correct way.
Others will do things a different way.
That is their lookout.
Yout advice is correct, period.

"What do you do?"

The choices are:-

1) Tell lies and hope you don't get caught but risk up to 14 years at her majesty's pleasure
2) Remortgage to a lender that can help without having to tell lies
3) Take a second charge secured loan from a lender that can help without having to tell lies. Could be useful if you don't want to remortgage off a very competitive deal
4) Talk to your bank or a commercial finance broker about taking a commercial facility secured by way of second charge over your home
5) Do nothing

And yes, I agree that a lot of people have chosen option one. More fool them in my opinion.

I agree your solutions are the best ones.
I think a lot choose the the wrong one because they don't know about the options you have suggested.
They don't know that they should ask and presume a certain way, even though they are only borrowers.
It seems sometimes people don't know how or who to ask the right questions of and conequently put themselves in possibly a bad situation.
As you suggest not for the faint-hearted.
Me I'd go your way.
I wouldn't want to risk my investments due to false declaration.
Thinking about it I have never made any false decfalrations.
I like to think I can sleep easy without worrying about if someone comes banging on my door in the early hours!
I have always played with a straight bat; but I know millions don't.
All I can say they have bigger cahonies than me!!