Mis-sold Mortgage Claims > Mortgage News
Buy to Let Mortgages Remain at High Risk of Mortgage Fraud
Fri, 28 Oct 2011
Rents across the country are going up which renders the buy to let market more attractive as an investment .

Yet memories of mortgage fraud and careless lending continue to haunt the industry.

The buy to let market is a more risky consideration than residential lending due to two main reasons.

The first reason is that buy to let mortgages usually require no proof of income, given that the customer has an income of more than £25,000.

This is self-declared and is not checked; they are able to borrow given that the rental yield is fine.

The second reason is that high reversion rates are associated with 125% cover.

This becomes an issue when interest rates increase. Rents are relatively inelastic.

If the Bank of England increases the base rate to 1% to 1.5% this means that most mortgage lenders’ 125% rental cover falls below 100%.
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