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Intermediaries abusing buy-to-let for self-cert borrowers

The FSA says intermediaries are using buy-to-let and let-to-buy mortgages for self-certification customers who would find it difficult to obtain a residential mortgage.

In its latest mortgage lenders round up, the FSA says lenders should have controls in place to ensure intermediaries cannot exploit their systems.

FSA manager of retail intermediaries and mortgage sector David Geale says: “We are aware that some BTL and let-to-buy mortgage products are being used by intermediaries to circumvent the more stringent income and affordability checks now undertaken on residential regulated mortgages.

“Lenders offering BTL and let-to-buy products need to ensure that their systems and controls cannot be ‘gamed’ by intermediaries.”

Geale says it is a particular problem where lenders are offering buy-to-let products to first-time buyers.

He says: “This is particularly the case, where lenders are offering BTL products to first-time buyers and where the affordability test is based on projected rental income only. The same applies to let-to-buy mortgages. We believe that lenders with weak systems and controls are more likely to be exploited by intermediaries still looking for ‘self certification’ mortgages.”

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