Singing Pig

Hi everyone,

 I am brand new to this game and have a question. It's probably a stupid question, but as my grandfather said to me once 'better to look a fool for a minute, then ignorant for a lifetime'!

 Anyway the question:

 Could you buy a property BMV. Let's say £150k, market value is £200k. Apply for a mortgage at 85% of market value (£170k). Borrow the the 30k from a private financer for the deposit (£170k + £30k = £200k). Then get the vendor to sign an agreement stating that they are happy to sell the property for £150k and anything above that will be payable to financer. You would then get the £30k back on the day of completion from the financer?

 Thanks for your help!

 Andy

HI Andy,

I am a fee free mortgage broker who can approach the whole of market for mortgage finance. We specialise in buy to let finance and I would be happy to speak to you regarding this matter.

Kind Regards

Simon Dearing - 0114 221 7229

Hi Andy

As stated you are better talking to a broker about this who can guide you through the process.

Best of luck.

Hi Andy,

 In theory, "yes", in reality, "no".  The transaction you describe is fraudulent in a lot of aspects.  The bottom line is that you will not have disclosed the incentive/discount to the lender and that amounts to mortgage fraud - plain and simple.  That is a criminal offence.  Also, are you aware that the £30K you get back would be regarded as "income" and you would be taxed on that?

With one in six property investors set to be audited by the Inland Revenue, you need to ensure that you have a legitimate money trail that will stand up to scrutiny.  The process you describe would not.

It is your personal choice whether you want to construct a deal in that fashion.  If you are going to do so, at least understand what you are doing and be aware of the risks involved.

Many brokers will tell you they can organise these type of "schemes".  However, it is YOU who signs the mortgage documents and YOU who is committing the crime - not them.  Bear that in mind.

Personally, I choose to ensure that all my deals are done with integrity.  By doing deals in the fashion you describe, you are defrauding the lender, but ultimately, the only person you are stitching up is yourself.

Please be very careful with this.  There are major investigations into these schemes going on behind the scenes and, as we all know, the truth always comes out in the end.