The Financial Services Authority says brokers are using buy-to-let and let-to-buy mortgages for self-cert customers who would not qualify for a residential mortgage.
In its latest Mortgage Lenders’ Round-up newsletter, David Geale, manager of retail intermediaries and the mortgage sector at the FSA, says lenders offering buy-to-let and let-to-buy products need to ensure that their systems and controls cannot be gamed by intermediaries.
He says: “We are aware that some buy-to-let 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.
“This is particularly the case where lenders are offering buy-to-let products to first-time buyers and where the affordability test is based on projected rental income only.
“We believe lenders with weak systems and controls are more likely to be exploited by intermediaries still looking for self-cert mortgages.”