Every week, I answer property investment questions on my YouTube channel. So, if you have anything that’s holding you back in your property investment journey, let me know and I will do my absolute best to help you find a solution to your problem or your question.
If you’re having success in property as a result of these videos or articles, please also let me know about that in the comments section of this week’s Q&A video. I love to hear how you’re getting on on your journey and I’d love to help you take things to the next level.
Last week I had a very interesting question about buy-to-lets on residential mortgages, so I thought I would highlight my reply in this blog post.
Hey Samuel, love your videos, my question is what is your view/general opinion on people who try to build or grow a property portfolio by purchasing on residential mortgages and using them for buy to let purposes without telling the lender? Do you think it hurts other investors or affects the property market?
So the first thing I’ll say is, you can’t grow a portfolio this way because the maximum residential mortgages that you can generally have is two.
If you buy a property and you tell your mortgage lender that you’re going to be living in the property, but then you actually rent it out, that is a breach of terms so you could be penalized for that.
I mean in theory, the mortgage lender could ask for the money back. They could say, ‘Hey, you’re breaking the terms. Can you please give me the mortgage back’ and you’d be forced to sell the house, pay back the mortgage and then they could blackmark you.
Are you going to go to prison for doing it? No. If you’ve got a residential mortgage and you’ve got a tenant in it, should you be losing sleep over it? No. But would I recommend doing that? Absolutely, I wouldn’t recommend doing that.
I understand why people do it, because you’re going to put down a very small deposit and it’s going to give you a much higher return on investment, but I would really suggest that you get the correct suitable mortgage.
If I was to say anything other than that I’d be being a bad property advisor, so that’s my opinion on it. There is enough money in property investment, if you do it right, to do it properly.
If you would like to see all the answers to the questions in this week’s video, please check out the full video here.
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