Buy property - living with a friend

HI,
I currently own a property and looking to get another one and working on different options to get the maximum loan.
I spoke to an agent who advised that If I have any of my friends to sign a letter saying that I can live in their house rent free - without actually living in their house - will significantly increase my borrowing capacity. This way I will have my current property and the new property which I intend to buy both technically as an investment property.

Is that the case ?? Is it legit - to do it for loan purpose only when I actually do not have intention to actually move to his property.

Thanks in advance for your help.

 

If you are going to committ fraud at least take advice from someone qualified to give that advice!

If you are living rent free most of the lenders would add a nominal rent paid. But since you have a main residence loan as well you would be assessed on that as well as the nominal rent so you would actually be worse off. It might be different if you had rented your house out tho.

 

Hmmm.... Are you using a broker?
If it is your intention to move into your friend's house and rent out your own along with getting rent from this new investment property, then the bank may well lend to you based on the expected rental income of the house you are living in now, as well as the new investment property, and then calculate the expense of a nominal rent amount for yourself as mentioned above. (Rental appraisals for both IPs presented)
If after the new loan is approved on that basis, circumstances change and you can't move into your friend's home as you previously intended, you may have to just keep living in your own home.
In my experience, something very similar occurred for me some years ago...er.... a couple of times actually.....
However, I was still well able to cover the new loan despite rising interest rates at the time and there was no issue with the bank as they kept getting their money without interruption.
Lending has tightened since then but I imagine a good broker will be able to give you guidance as to whether your proposed scenario would work now.

 

A criminal lawyer?