News

Follow our property market updates

Buy-to-let property investment and the mortgage pitfalls

Did you know buy-to-let mortgages are not regulated?  This means unsuspecting investors and landlords with a buy-to-let property investment could fall foul to re-payment hikes and larger interest rates.  This includes fixed-rate and tracker mortgages even though they are linked to the Bank of England rate, currently at 0.5pc.

The recent example of the Bank of Ireland backtracking on their plan to increase mortgage rates has offered partial relief to some landlords.  Under the original decision, those with buy-to-let mortgages with the BOI were facing a steep rise from base rate plus 1.75% (2.25%) to base rate plus 4.49% (4.99%).  The U-turn has been seen a victory in the industry, with insiders citing “landlord power” for the Bank of Irelands decision to backdown.

Landlord Action said:

“The Bank of Ireland has reversed it’s mortgage hike for over a thousand borrowers. And it’s all because we all complained. This is landlord power. And this should be a lesson to all landlords. We believe that lenders will always try it on. And then they’ll wait see what happens. If nobody complains they can just carry on. But under the regulations, the banks are obliged to look into every single complaint.”

On top of this, landlords and investors are being warned about mortgage fraud.

Invest Connect has found evidence to suggest a rising number of investors and landlords are being tricked into believing they can buy a property without putting any money down. Corrupt agents and websites are wrongly offering ‘no money down’ deals which involve the unsuspecting investor claiming they paid more for a property than they actually did with the intention of securing a mortgage loan for the actual price paid to ultimately end up with a no cost purchase.

Property investment experts are warning, “If you do not disclose the discounts by having the gross price put on the contract and having the property valued at the gross price, you are defrauding Land Registry and the Inland Revenue and laying yourself open to severe problems, should you ever be audited.”

Invest Connect has put together some of the key questions to ask, which will help investors and landlords identify if it is a fraudulent mortgage transaction:

•    Are you being asked to sign paper work with differing headline purchase figures?

•    Has the value of the property significantly increased in a short period of time inexplicably?

•    Is the amount of the mortgage for the full purchase price of the property?

•    Is the deposit being paid by someone other than the purchaser?

•    Have you been asked to enter a price on the title that is greater than you know was paid for the property?

If you are a landlord or investor or considering a buy-to-let property investment, The Mistoria Group and their team of expert accountants can offer you sound and impartial advice on your mortgage and financing options.  Call the team on 0800 500 3015.

Share This