Fraudulent mortgage applications on the rise again

Finding a competitive mortgage deal can be a real challenge for many, but an increasing number of Britons are choosing to use all-too desperate options to get the deals they want, including resorting to making fraudulent applications.

According to Experian, almost 9 out of ten cases of attempted mortgage fraud in 2012 were individuals knowingly giving false information about their personal financial circumstances – typically, lying about their credit and job histories on their application forms in order to get a mortgage.

So who are these poor potential homebuyers so desperate that they would resort to telling lies?  In the main, middle-aged, skilled individuals living in suburbs, who accounted for 15% of first party mortgage fraud cases in 2012.

Experian also predicts that 2013 could see a further rise in mortgage fraud, as household incomes (and now benefits) continue to be squeezed, and criteria for general lending gets tougher.

So what are the ways in which people can search for the right mortgage in the right way, without having to resort to telling fibs about our finances?

It can be a great help to have a good credit history, if you are looking for a good mortgage deal.  Take a look at your credit report, which lists your credit accounts and repayment record.  It gives you a snapshot of what you owe and how well you are coping – if you’re already overstretched, there may be work to do before you look for a mortgage or remortgage.

What to do next?
  • Use some credit on a regular basis, but never take on more than you can afford.
  • Stay within the agreed credit limits and always make your repayments on time, paying more than the minimum off your credit cards each month if you can.  Missed or late payments stay on your credit report for at least six years.
  • Space out your credit applications and avoid making several applications close together
  • Make sure you register to vote at your current address
  • Get into the habit of reviewing your credit report on a regular basis – make sure everything is accurate and up to date and query anything that isn’t.
  • Review financial links to other people and ask for any outdated links (e.g. to an ex-partner) to be broken.
  • Explain any missed payments by adding a “notice of correction” (up to 200 words)
  • Review your credit utilisation rates (i.e. your balances versus your credit limits) and aim to keep them below 30 per cent.

Source: Experian