Would you lie to get a mortgage?
The number of cases of mortgage fraud has risen by 23% year-on-year as potential homeowners go to extreme lengths to try to secure a mortgage.
A total of 39 in every 10,000 mortgage applications were identified as fraudulent between April and June 2012, up from 32 during the same period in 2011.
Unlike in other cases of fraud, such as savings fraud, where the fraudster is a third party committing identity theft, with mortgage fraud it is a first party crime. People are deliberately misrepresenting their own circumstances in order to increase their chances of getting a mortgage.
Almost a quarter (24%) of mortgage fraud attempts were people hiding adverse credit information. A further 21% of fraudulent applications involved people providing misleading employment histories.
"Over the course of the last year, we have seen mortgages continue to be targeted at a high rate, with more people trying to misrepresent their personal, employment and credit information on applications to get properties out of their reach," says Nick Mothershaw, director of identity and fraud services at Experian.
"At the same time, we have also seen an increase in the number of properties where the use of the property is misdeclared, such as applying for a regular residential mortgage on a buy-to-let property."
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.