Re-mortgage questions?

by Readers Question

14:45 PM, 8th February 2017
About 2 years ago

Re-mortgage questions?

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Re-mortgage questions?

I’m struggling to find a lender who will remortgage a property I own outright. My intention is to use the money part for debt consolidation and part as a deposit for another property but through a ltd. company. The broker keeps saying it’s for business purposes and they won’t lend.

Does anyone know of any ways where they don’t question a re-mortgage..?nondisclosure

Thanks in advance.

Paolo



Comments

Neil Patterson

14:53 PM, 8th February 2017
About 2 years ago

Hi Paolo,

You have to be very careful here.

It is your responsibility to give an accurate picture to the lender of the true nature of the transaction. Even if the specific question is not asked it is mortgage fraud to omit information by non disclosure.

If the lender would not enter into the agreement if it knew all the facts then you can't hope you will get away with it by not mentioning everything relevant.

However, debt consolidation is not an issue for all lenders and if you want one of our whole of market brokers to look into this then email me on npatterson@property118.com.

Ian Narbeth

9:52 AM, 10th February 2017
About 2 years ago

Reply to the comment left by "Frank Brennan" at "08/02/2017 - 14:53":

I think Frank overstates the point by saying: "Even if the specific question is not asked it is mortgage fraud to omit information by non disclosure." No it is not. The mortgage contract is not one of insurance where the principle of utmost good faith applies. There is a duty not to mislead but not a general duty to volunteer information that might be of interest to a lender.

Paolo, you do not provide much information but it is surprising that you cannot find a lender. It may be more to do with the property or your financial circumstances than the purpose for which you wish to use the money. Wanting to release equity is not normally a bar. I have raised money on one property in order to purchase another and it is very common for lenders to re-mortgage for a higher sum than the loan being redeemed. I suggest you talk to an experienced broker and find out what the real issue is.

Neil Patterson

10:00 AM, 10th February 2017
About 2 years ago

Correct there is a duty not to mislead the lender of the true nature of the transaction, hence if you do deliberately by non disclosure it is, or can be mortgage fraud.

Howard Reuben CeMap CeRER

10:24 AM, 10th February 2017
About 2 years ago

Quite apart from the reams of criteria, and mortgage offer terms and conditions, the applicant also always has to sign a declaration at the end of the application form, which usually states something like this;

"The information supplied in this application is true and complete
to the best of my/our knowledge and belief. I/We will tell you if the
information changes before the application is finalised. "

and the lender also has a caveat written;

"If false or inaccurate information is provided and fraud is identified
or suspected details will be recorded with these agencies to prevent
fraud and money laundering."

Why there is even a question and debate on here today about whether to disclose or not, is very worrying.

Our Clients are always asked to support their requests for additional borrowing by producing relevant documents for the reasons of the required funds.

If it's for business purposes, debt consolidation, or whatever, so be it. That in itself is not a problem, certainly not for an experienced and independent Broker who knows the lenders who say yes.

Always tell the truth, always fully disclose and sleep well at night knowing that you don't have to look over your shoulder for the mortgage fraud squad, the Hunters list, the blacklists and other punitive measures that would occur if you were caught!

Our Team is available to assist, via my profile above.

Kate Mellor

11:13 AM, 10th February 2017
About 2 years ago

I suspect the problem may be that you have stipulated you will be purchasing the new property through a Ltd company rather than in your own name. What that effectively means is you will be loaning the money to a Ltd company, what the company does with it is to carry out business activities. I think that had you said you would be purchasing another buy to let it may not be an issue. Owning a buy to let property is considered earning investment income and not a business activity.

as both Howard & Ian suggest you may need to contact another broker with a wider market choice as there are many many non-high street lender choices and many of the ones which were more narrow in their approach to buy-to-lets are now being much more welcoming of those with more extensive property businesses and as company structures are becoming more commonplace I'm sure there must be some who wouldn't baulk at your plans.

Paolo Spina

14:34 PM, 10th February 2017
About 2 years ago

Thank you very much for all the advice, it is appreciated.

I was a bit vague with the details; basically I wanted to re-mortgage and have he money sit in my account until I was ready and sure how to utilise it.

I was told lenders won't do this as the money has to be spent on something, so would need a reason to re-mortgage. I mentioned that going forward I would probably start to purchase properties through a Ltd. Company as all the new tax changes but wasn't ready yet. In regards to that the lender said it would be considered business purposes as Ltd. Company and probably won't lend. Unfortunately I don't want to buy anymore as a sole trader. From this it seems I'm stuck between a rock and a hard place trying to go forward. Is this just the broker..? Are there any lenders out there who are not bothered what you do with the money...Or is this the general rule when you try to re-mortgage...?

Thanks in advance.

Paolo

Neil Patterson

15:10 PM, 10th February 2017
About 2 years ago

If you are refinancing for further purchases lenders do not expect you to use the money day 1 but at some point to use it for that purpose and not another.

Priti S

19:36 PM, 10th February 2017
About 2 years ago

Hi Paulo

We've just done this transaction on encumbered property been remortgaged and purpose of funds is to buy another buy to let at some point in the future. It was no issue with The Mortgage Works.

Feel free to contact my broker about this if you want Steven.sussman@hcf.co.uk

John Constant

10:48 AM, 11th February 2017
About 2 years ago

Priti, Paulo,
The Mortgage Works will lend for business purposes and consolidation if you refer to them prior to submission to ensure certain conditions are met. However, TMW are not the only lender to lend on both circumstances mentioned, I found 4 others, though TMW are probably offering the better rates overall. Please feel free to contact a Property118 partner via my member profile.


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