Mortgages.scot

If faced with times when interest rates are rising or in the case of today, already too high and affordability tests make it more difficult to get a mortgage, lenders may be turning borrowers away, What can they do? One area where there has been a rise is in BTL gaming.

What is BTL Gaming?

Simply put, BTL Gaming is where a borrower who can’t get a standard mortgage to buy a home will try and obtain a BTL mortgage instead. Why? Because most high street lenders don’t carry out an affordability test like they would on a standard mortgage. They simply test that the potential rent achievable will be enough to support the mortgage.

But, the borrower’s intention isn’t to rent the property, instead, their intention is to live in it.

Lenders do not allow this. If they discover that a borrower is living in the property it is likely the lender will create an event of default and take action to force the sale of the property. They may first request that the mortgage be transferred to a standard mortgage but require an affordability test the borrower was trying to avoid in the first place.

BTL Gaming for First-Time Buyers

Lenders will generally not allow first-time buyers to have a BTL mortgage. There is perceived to be a high risk that they will occupy the property themselves.

An example of BTL Gaming

Say you have clients who already own a home they live in and have a mortgage. They want to purchase a second home, perhaps for a family member or as a holiday home.

They have perhaps already tried to get a second mortgage and been refused due to the affordability test not working. They then approach other lenders but state the reason for purchase is for investment and they intend to rent.

For most high street lenders the affordability test drops away and is replaced by a different test based on rental. If that works then it’s likely to go through much easier than a standard mortgage.

Should you do this?

The only answer should be no. It would be irresponsible of me to say otherwise. I can however sympathise with some people for whom affordability tests don’t fairly take into account their circumstances. Unfortunately, for today at least, rising interest rates and tougher market conditions are an issue for lenders as much as borrowers.

BTL Gaming, as much as it may seem the only option is more likely to end up with your lender taking action against you.