Why fudging your mortgage application is a bad idea

Why fudging your mortgage application is a bad idea

We’re not even going to bother with an intro sentence on this one.

The answer? Never, ever. Fudging figures or other information on a mortgage application is a mistake that costs a person more than they may initially realise.

Here’s why.

Why this matters

Sometimes, we like to read through online forums to see what people are worrying about in the mortgage sector.

As well as simply talking to people (which we do a lot of!) it’s a good way for us to stay on the pulse of what matters to borrowers.

Recently, we noticed a popular thread on the prospect of fudging a mortgage application in order to secure finance. This struck a chord with us, so we did some research.

Data on mortgage fraud

According to a survey conducted by UBS in 2016, 28% of people said their home loan application was not 100% factually correct. (The survey took in 1,228 respondents.)

  • 14% said their household income was overstated.
  • 13% said they overstated their asset value.
  • 17% said they understated their debt.
  • More than a quarter said they understated living expenses.
  • 40% didn’t specify.

Why fudging your mortgage application is a bad idea

There’s a reason why a mortgage broker needs to fill out a lot of paperwork when applying for a mortgage on your behalf.

Your broker needs to prove to the lender in question that you have the capacity to pay off the loan, within the time frame stated.

This means providing information about your earning capacity, as well as profits, liabilities, assets and other data relating to your ability to repay the loan according to the contract’s terms.

No lender has exactly the same loan criteria. Some put a greater emphasis on specific requirements, which is why a good mortgage broker is very useful.

But let’s get back to the issue at hand.

The consequences of mortgage fraud

  • The loan is approved, and the borrower is stuck with a mortgage they do not have the capacity to repay. As a result, the borrower experiences stress and uncertainty.
  • The authorities discover the fraud and the person responsible is prosecuted by the Commonwealth Director of Public Prosecutions (CDPP) under the Criminal Code. This can include jail time, in serious circumstances.
  • If mortgage fraud impacts a group portfolio, withdrawal of investor funding and support is common.

Secure a home loan

We compare hundreds of different competing loan products, and pinpoint one that matches your budget and life circumstances. We also help you supply all the necessary information, and handle the paperwork on your behalf.

Contact us to discuss your next loan.  

Financial and Legal Advice Disclaimer: This information is general in nature. Mortgage brokers do not provide financial  or legal advice. Clients seeking financial or legal advice will be referred to a qualified financial planner or a legal professional.