Wilmslow, Cheshire ( release-news ) October 1, 2012 - The Financial Service Authority has issued warnings that there has been a marked increase in buy-to-let mortgage fraud by people who are unable to gain an owner-occupier mortgage offer from lenders.
Borrowers with a 25% deposit or more required by buy to let mortgage lenders are applying for buy to let mortgages which have better interest rates, interest only repayment options and less strict lending criteria. The FSA believes that this is a way around the current restrictions for people who wish to invest in property and this is set to increase over the next year as lenders fail to relax their lending criteria.
Due to the strict lending criteria people are finding it increasingly hard to come up with a large enough deposit, and are finding it difficult to meet the mortgage repayments where previously, people could opt for interest only repayments.
Richard Iganowicz is a whole of mortgage broker and Director of Mortgage Savers. He says:
"Lenders crying wolf and FSA claiming a fraud loophole. There must be something wrong if people are failing to get normal 90% LTV residential mortgages and therefore having to revert to 75% LTV buy to let products!
"The government initiative to have the banks lend more money seems to be falling on deaf ears, cynics would say that BTL lending is more profitable than like for like 75% LTV residential products so why do they need to loosen lending criteria for residential mortgages? After the LIBOR fixing revelations can we really trust them to be doing what is best for the customer?
"The solution is simple, improve lending criteria for residential mortgages and you will automatically remove the fraud alternative.
"Instead of the FSA spending their resources hunting out fraudulent applications they should come down hard on the banks (the root cause of the problem) and close the door to this loophole in one simple move!"
Notes to Editors
Mortgage Savers is a "whole of market" mortgage brokerage. We are fully qualified consultants, not sales reps; offering totally impartial help and guidance. We help people find the best residential, commercial or buy-to-let mortgage product available from over 200 lenders offering in excess of 10,000 mortgage products. To find out why you should use a broker who is also an investor click here. For more information on Mortgage Savers click here. If you are worried about buy to let mortgage fraud, contact us today.