Experian has revealed that for the sixth year running, mortgage application fraud rose in 2012 – this time by 9 per cent from the 2011 figures.
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.
Although fraudulent applications for current accounts fell sharply in 2012, application fraud as a whole went up by 3 per cent across financial services, driven not only by the rise in mortgage fraud rise but also by growth in credit card and savings fraud.
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. It’s free to see your Experian credit report with a 30-day trial of CreditExpert.
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Review financial links to other people and ask for any outdated links (e.g. to an ex-partner) to be broken.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