What Happens If You Get Caught Living in Your Buy to Let?

What Happens If You Get Caught Living in Your Buy to Let?

Living in a buy-to-let property that you have financed with a buy-to-let mortgage is considered mortgage fraud, as buy-to-let mortgages are meant for investment properties that will be rented out. If you are caught living in the property by your lender, there can be serious consequences:

• The lender may demand immediate repayment of the entire outstanding mortgage balance. This could force you to sell the property.
• You may be prosecuted for fraud if it’s proven you lied on your mortgage application. This could lead to criminal charges.
• Your credit score will be severely damaged, making it very hard to get future loans or mortgages.
• You may be added to industry blacklists that lenders use, essentially blocking you from getting approved for future mortgages.

There are a few legal ways to live in the property, such as getting consent from the lender, remortgaging to a residential mortgage, or waiting until the fixed mortgage term ends.

But in general, intentionally lying to obtain a buy-to-let mortgage is risky and can lead to financial and legal trouble if caught.

Can I Live In My Buy To Let Property UK

Living in a property that has been financed with a buy-to-let mortgage is considered a violation of the mortgage terms and conditions, and is known as occupancy fraud, a form of mortgage fraud.  This action can lead to serious legal and financial consequences

If you are caught living in your buy-to-let property, you will be in breach of your mortgage terms and could be committing mortgage fraud. The mortgage lender may ask for the immediate payment of the loan amount.

In addition, if lenders find out about this occupancy fraud, they might report it to credit reference agencies, which could negatively impact your credit score, making it difficult for you to get loans or mortgages in the future

In more severe cases, occupancy fraud can lead to a prison sentence.  You could also end up on the rogue landlord and property agents list, which is a list of landlords who have been involved in criminal activity in the past. This list allows lenders and banks to see who they should and should not be dealing with

However, it’s important to note that it’s not illegal to live in your buy-to-let property if you have the consent of your mortgage lender

If you wish to move into your buy-to-let property, you should start by notifying your mortgage company and discussing the situation with them. You may need to request a change in the mortgage terms to make it your primary residence

If you didn’t use a buy-to-let mortgage to fund your property purchase, then you can live in the property. This is because you paid for the property outright – you own the entirety of the property and can do what you like. You won’t be in breach of any mortgage terms by doing so

In general, while it’s not illegal to live in your buy-to-let property, doing so without the consent of your mortgage lender can lead to serious legal and financial consequences. If you wish to live in your buy-to-let property, it’s recommended to discuss this with your mortgage lender and possibly change your mortgage terms to avoid any potential issues.

Can I Switch My Buy-To-Let Mortgage To A Residential Mortgage?

Yes, it is often possible to switch a buy-to-let mortgage to a residential mortgage but there are some important factors to consider:

It is possible in many cases but not guaranteed. Talk to your lender and mortgage broker early on to understand your options and costs. With careful planning, you can often make the switch successfully.

Consider that;

• You will need your lender’s consent to make the switch. Not all lenders will allow it, so check your mortgage terms.
• There may be early repayment charges if you are still within your existing mortgage term. This could add substantial cost.
• You’ll need to qualify for the residential mortgage based on affordability assessments. Your income will need to be sufficient.
• Your loan-to-value ratio may be reassessed based on the property’s current valuation. You may need to put down a larger deposit.
• Switching from interest-only to repayment mortgage will increase monthly costs. Factor this in.
• You’ll pay conveyancing fees to draw up new mortgage deeds.
• Tax implications if you were previously deducting mortgage interest – you may lose this benefit.

Can I Remortgage My Buy-To-Let To Live In The Property?

Yes, it is possible to remortgage a buy-to-let property to live in it yourself, but there are some key things to keep in mind:

• You’ll need consent from your existing lender to remortgage. Not all will permit this change of use.
• The new mortgage will need to be a residential rather than buy-to-let mortgage. Your income will be assessed for affordability.
• You may face early repayment charges if still in your deal term. Factor this cost in.
• Your loan-to-value will be reassessed based on current property valuation. You may need a larger deposit.
• Switching from interest-only to repayment mortgage will increase monthly costs.
• You’ll pay fees for conveyancing, valuations and paperwork. Factor these in too.
• Tax relief changes – you’ll lose the ability to deduct mortgage interest.

Overall, remortgaging an investment property to live in yourself is possible in many cases. But be aware it can incur significant fees and costs. Speak to a good mortgage broker who can guide you through the process and help ensure it goes smoothly. With some forward planning, you can often remortgage successfully.