Buy to Let Mortgage applications on the rise…but are they fraudulent?

22 March 2012 Categories: News

Buy to Let Mortgage applications on the rise…but are they fraudulent?

According to a statement made by the Financial Services Authority the number of buy to let mortgage applications is on the rise, but unfortunately a growing number of the applications are now turning out to be fraudulent.

It seems that wannabe homeowners who fail to meet the stringent borrowing criteria for a residential mortgage are turning to buy to let mortgages as a means to buy property – even though they have no intention of renting the property out to tenants and they understand that they are in fact committing a fraudulent transaction.

Buy to let mortgages are not regulated in the same way as residential mortgages and the borrowing criteria are much more relaxed. This means that buyers who fail to meet the income and credit check requirements of a residential mortgage can still get approval for a similar sized buy to let mortgage…and both intermediaries and financial advisors are helping to make the fraudulent applications.

When asked about the new form of deception the FSA commented “We are seeing anecdotal evidence of unregulated buy-to-let mortgages being used fraudulently as a replacement for regulated residential mortgage contracts, as borrowers and intermediaries seek to circumvent more stringent income and affordability checks.”