Buy-to-let landlords may not be getting the best mortgage deal, or they could find themselves locked into mortgages with high standard variable rates, as a result of mortgage deals set up by bad brokers.
According to The Mortgage Broker Ltd, some landlords are missing out on good mortgage deals because they are working with unprofessional brokers, who are lazy and only use lenders that they are familiar with, rather than searching for the best deal for the landlord.
In the worst case scenario, bad brokers can be outright fraudulent – lying about income, or other aspects relating to the applicant.
Darren Pescod, MD of The Mortgage Broker Ltd comments: “We have seen evidence of mortgage brokers securing mortgages for investment properties, which are then inhabited by family members. Or they have arranged a mortgage for an investment property, that is either a multi-let, Airbnb or student accommodation, without informing the lender.
This is highly unprofessional. If a lender finds out, it could withdraw the mortgage and in a worst case scenario, the client could be slapped with mortgage fraud, which will severely affect their ability to borrow funds, or obtain mortgages in the future.
Some landlords don’t understand the severity of a little white lie to the lender, or understand the implications of not divulging their full intentions with the property, or their personal situation. Lenders are more geared up now to do post application checks and are on the lookout for scheme abuse and mortgage fraud.
If landlords are working with bad brokers they don’t need to feel trapped. They can often make changes to their mortgage arrangements with the help of a reputable, experienced and professional broker.
There are some great buy-to-let mortgage deals around at the moment, such as lenders still willing to offer a mortgage at 125% of the pay rate, rather than the recent increase in rental calculations, made my most lenders.”