What Should I Not Tell A Mortgage Provider About What I Want To Do With The Money

[Thunderchild]

Like many I own a house and have a mortgage.. well a few as it is the cheapest way of borrowing when necessary. One of my mortgages is up for renewal and at less that £1000 and can allow it to lapse and then pay it off.

i have another "further advance" up for renegotiation and had an initial chat today and got an agreement in principle that i can borrow up to another £47'000.

So with rates where they are I can borrow probably for less than 2% and the more I borrow the lower the rate. I could put 10-20'000 into savings (P2P lending) and earn 6.25% making a net of 4.25%. Would i be best advised to not tell them I am doing this ?

[woofgang]

P2P is blooming risky as I understand it. I know they used to ask what you wanted the money for, not sure if they still do....I am not sure I would lie.

[Thunderchild]

If you listen to the bank friendly media of course they say it is risky because they want P2P to dissapere so that their model of doing business stays around. I have been doing P2P for some years and not lost any money at all. sure defaults happen but the gross rate of interest on loans is designed to take care of it erm..... just the same as how the banks work.

from a risk point of view the yield from P2P will have nothing to do with their assumption on my affordability as that is based on my wages. if anything there is more chance of the money still being around if i need it to pay tho mortgage off rather than blow it on a new kitchen as I can claim. The never check what you actually spend it on.

Last time i wanted to over borrow when I neede a car so that i could put some money into my main martgage, but having told them that was what i was thinking they refused to let me borrow more at 1.25% to pay off a mortgage with them at 3% so I am a bit wary.

[Buenchico]

As has been said, P2P is risky:
https://www.moneyadviceservice.org.uk/en/articles/peer-to-peer-lending--what-you-need-to-know

Further, misleading a lender counts as 'fraud by false representation', for which the penalty is up to 10 years imprisonment.

My advice is to play by the rules!

[gingejbee]

^^^indeed Chris....I know a couple who were 2 years in prison recently for fraudulently obtaining mortgages.

[Thunderchild]

Yes in principle P2P is risky, like i said as far as they are concerned the money is spent and will be repaid from my wages so if i loose it I'm in the same boat as having a kitchen refit, the capital is spent. As to going to prison that is due to things very different from not declaring exactly where the money goes. For example they have taken me on trust about my earnings etc and won't be doing masses of checks into my background, if I lie about stuff like that sure i go to jail....

[Thunderchild]

I heared of a guy leaving his job and wanting to take out a mortgage on the basis of payslips for a job he did not have, now that is fraaud and warrants imprisonment (particularly when you no longer have a place to live:))

[Thunderchild]

The P@P lender is part of the FCA, they mostly do property based loans with copious security and yen they have their clients money in seperate accounts, if they go bust we keep our money.

[Peter Pedant]

you are borrowing from a stable lender for a risky investment.
Someone has told you not to
and I am not going to clutter this up with repeated good advice - you gonna anyway

You should use a mortgage for .... a mortgage and buying a house - erm funny that

so no you shouldnt ( borrow )
yes you should tell them the purpose you are borrowing to get interest - I think this may be 'invest'
and no you should not borrow for purpose A and intend to use and then use it for purpose B - really bad idea

any other rather obvious facts of life you need to check on?

[Peter Pedant]

Good someone else has mentioned Fraud

from what you say - this is an obvious fraud

actually I think this thread is a wind-up
I notice "seperate" and "heared"

any other advice - yeah make sure you like porridge before you do any of this because you will be eating a lot of it soon.

[Thunderchild]

OK thank you. my questions are answered.

[ABerrant]

"Further, misleading a lender counts as 'fraud by false representation', for which the penalty is up to 10 years imprisonment."

Up to 10 years imprisonment;
or a slap on the wrist followed by a return to Cabinet as a Secretary of State, then appointment as EU Commissioner and then ennoblement allowing another return to Cabinet.

[Thunderchild]

Or if your a banker you go bankrupt and get the public to bail you out and then bad mouth the honest competition......

[woofgang]

your choice....you asked the question and we have answered. I am not sure why you seem to be getting defensive.

[Peter Pedant]

//or a slap on the wrist followed by a return to Cabinet //

which lucky investor was that ?
or just a generic comment

[Thunderchild]

woofgang - yes i asked, people on here get very high and mighty very quickly, i do indeed have some work to do on the house, I will not have firm quotes before I take out the mortgage, a solar system could easily cost £12K, i know as of 10 minutes ago i could get it as low as £7K (because he is happy to use kit I already have and he is not a scumbag) that's a £5K difference I could legitimately end up with oh what to do with it? burn it? or put it away for future use.

Reality is that unless you are being really stupid they won't care and so long as you can pay it back.

My question was more about the official guidelines, they basically don't want you using the security of your house to make borrowing cheaper as they would rather have you use a "more appropriate" and expensive product for that.....

[woofgang]

I don't see high and mighty on here, I see genuine honest concerned answers. Again you seem to me to be a little on the defensive.

[Thunderchild]

I should have probably phrased the question differently and left the P2P stuff out. It's what are peoples experiences of the official guidelines they follow i was after. For example last time i could have borrowed the extra had i not told them it was to make my financial situation even better. Fact is any lender is falling over themselves to lend mo money given my credit score and the fact that I'm not an idiot with money. The guy that gave me the decision in principle was almost surprised when he asked me if there was anything i would prioritise over the mortgage and I said "yea food"......

[woofgang]

My experience is that the mortgage lender will ask what the loan is for even if its approved in principle. If you lie to them its fraud by misrepresentation. Of course if they don't ask then you don't have to tell....but if things get sticky then you might need to prove you weren't asked.....