Why You Shouldn’t Lie On A Home Loan Application

It’s tempting to fudge the numbers on a loan application in order to ensure you squeeze a few more dollars from a lender. With house prices now recovering and moving back up, the pressure on buyers to scrounge up a few extra dollars is increasing. But exaggerating your income and assets on a loan application isn’t just a recipe for future financial disaster. It’s also likely to be found out during the application process and could lead to more serious consequences.

Global investment bank, UBS, published research last year saying that more than a third of home loan applications weren’t entirely honest. The survey of over 900 people found that borrowers who bought more than one property in a single financial year were the most likely to lie. About half of borrowers with two or more investment properties admitted to being less than truthful about their earnings and debts.

While you may think getting one over the bank is a great way to stick it institutions that most people think have been screwing us for decades, the reality is that lying on a loan application is fraud. Banks are able to see statements from other banks when examining a loan application making it harder than ever to fudge the numbers.

“Since the Royal Commission into banking lenders, particularly the big four, have the ability to share information about potential borrowers. It means if you lie about your wage the bank will be able to cross check it against your statements, if you lie about your debts they will be able to check with just about every lender in the country except your local loan shark,” Graham Doessel, the CEO of MyCRA Lawyers, said in a statement emailed to Lifehacker Australia.

If you’re caught out and the bank decides to prosecute you for fraud, there’s a potential 10-year stay as a guest of the state. But even if you aren’t sent to jail, that fraud conviction will hang around and affect insurance applications – that “Have you been convicted of fraud?” question is there for a reason – as well as future loan applications.

Doessel said, “For most people the easiest way to boost your chances of being approved for a home loan or any loan for that matter is to have a deposit and a good credit history. A blemished credit file these days is behind more people to being rejected for a loan than almost any another cause”.

If you’re looking for a new home loan, either to buy a house or refinance, be 100% honest. Getting rejected for an application isn’t a disaster. In fact, a rejection may be saving you from future headaches if you’ve overstated your income and can’t make the payments if things get a little tighter in future.


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