Liar liar pants on fire
MONEY is a lot harder to get your hands on today than a year ago, and as a result, desperate would-be borrowers are fudging their finances to get approval.
Comparison site Finder has revealed one in eight mortgage holders acknowledged to lying on their home loan paperwork to get it over the line.
The sample survey found 13 per cent admitted to falsifying details – a snapshot that would translate to more than 400,000 borrowers, given there are about 3.3 million mortgagors in Australia.
In the research, Finder also discovered 4 per cent (equal to more than 100,000) of home loan holders surveyed revealed they lied about their income and the same proportion again said they had falsified their level of existing debt.
A similar survey by UBS in early 2022 actually showed that dishonest behaviour on home loan applications could be on the decline.
The annual report showed that 37 per cent of new mortgage holders submitted “factually inaccurate” loan applications between July and December 2021, while the previous year that number sat higher at 41 per cent.
Home loans expert at Finder Richard Whitten said it isn’t unheard of that people stretch the truth while trying for a mortgage, but added that borrowers need to proceed with caution.
“Being dishonest on a home loan application is a recipe for disaster. You might be committing an act of fraud and you could even lose your home in a worst-case scenario,” he said.
“While the lies might never come to light — your ability to afford the loan could create a lot of financial stress.”
Given the dramatic change in borrowing power seen last year, Mr Whitten said that after the RBA increased interest rates for seven months in a row – it’s no surprise house hunters are tempted to lie about their finances.
The string of hikes has lowered the average person’s borrowing capacity by more than 20 per cent since April 2022.
“As housing affordability deteriorates, Aussies are scared of being rejected and missing out on getting on the property ladder,” he said.
“While small inaccuracies may not be the end of the world, if a lender finds a big discrepancy in the figures you’ve given them or you’ve outright lied about your financial position, the consequences could be severe,” Mr Whitten explained.
“Home loan contracts typically contain wording around providing misleading or incorrect information to a lender.
“In the worst case, lying on a mortgage application is grounds for a default event, meaning the lender could sell your property.”
Mr Whitten added that even without the legal woes, borrowers could be setting themselves up for financial failure if they can’t afford the repayments.
“It’s important to track expenses as people sometimes forget where their money goes,” he said.
“Lenders crosscheck everything and applicants who intentionally provide incorrect information could potentially receive a black mark on their credit score and in severe cases applicants could have their loan called in, meaning they have to repay the loan in a hurry.”