Buy to let mortgage lenders fear gaming fraudsters trying to finance their own home may lead to more regulation for property investors.
Gaming is when a homebuyer tries to get a buy to let mortgage because their financial circumstances fail strict residential mortgage affordability rules.
In a survey by professional adviser newspaper Money Marketing, 50% of mortgage brokers confirmed they had seen potential clients trying to flout mortgage rules by gaming.
Buy to let mortgages give them a loophole to exploit because they are based on market rents backing affordability rather than the home buyer’s income.
Gaming concerns were raised at a recent buy to let panel meeting hosted by property investment specialists Paragon Mortgages.
Delegates claimed the European Union Mortgage Credit Directive stopped lenders offering self-cert loans and buyers were trying to circumvent the rules by claiming they were purchasing a home to rent out when they really intended to live there.
They were concerned regulators would step in to tighten up lending rules to stop the fraudsters.
The panel also disclosed that two-year fixed mortgages were the buy to let mortgage of choice with landlords – with more than 60% opting for the rates.
However buy to let mortgage professionals at the meeting felt five-year fixes would give landlords better value for money and security against future rate rises.
The panel also felt that buy to let lenders would advance around £26 billion to £28 billion to landlords this year as the market expands with new investors.
Meanwhile, Virgin Money is offering a new range of landlord mortgages at 75% loan-to-value – a boost of 5% loan to value over previous deals.
The range includes buy-to-let tracker mortgages and a two-year fixed rate at 3.35% with a 2.5% arrangement fee.
The lender is also offering a £750 cashback for buy to let borrowers.