Lies help thousands get a home loan, but make it harder to pay off
home loan
Jan 30 2023
New Daily

Thousands of home owners have fibbed to secure a home loan, but experts warn they will have trouble bearing the cost of their lies down the road.

A Finder survey shows one in eight people falsified details during the home-buying process, with 4 per cent of Australians lying about their income, 4 per cent lying about their debt, and 9 per cent lying about their savings.

Michelle May, principal of Michelle May Buyers Agents, told TND that while the findings aren’t surprising, they are worrying because people are taking on huge amounts of debt based on false information.

“I always say, ‘No property’s worth eating baked beans for the rest of your life’,” she said.   

“If you’ve taken out a huge mortgage and the value of your property has come down, you could be left with negative equity, and then a property you can’t sell, and then you end up with a massive debt.”

Ms May said she frequently sees potential clients realise they can’t afford the type of property they were originally after once they’ve had a harder look at their finances and been through the home loan pre-approval process.

And home loans are only set to get more expensive, with Australians warned to brace for at least two more interest rate hikes this year.

“It is so important to understand what your budget actually is,” she said.

Running the risks
Montara Wealth and Binnari Property director David Hancock said while people are always keen to push boundaries and skirt around rules in every aspect of life, getting away with it during the home loan application process would be tricky.

Credit reports can be integral to getting approved for a home loan in Australia, and any substantial debt, such as credit cards or car loans, should show up on those reports.

When it comes to income, most banks will seek verification, and producing documents like fake payslips toes the line of fraud.

Last year, a South Australian man was found guilty of handing in fake payslips to banks on behalf of clients to help them secure home loans, receiving a suspended jail sentence of four years and nine months.

In 2017, a Melbourne-based mortgage broker pled guilty to conspiring to defraud financial institutions by $170 million through falsified documents for home loan applications, and received a five-year jail sentence.

Most Australians wouldn’t want to run the risk of facing criminal charges in the hopes of getting a home loan, and are more likely to tell smaller lies about things like pregnancy, which could also potentially affect their loan eligibility with certain financial institutions, Mr Hancock said.

Being caught lying about anything during your home loan application process will provide strong grounds for your application to be denied – and then you will have to explain why you were previously denied the next time you apply for a home loan.

Get a handle on your finances
Experity director Clint Howen said lying isn’t always the reason there might be discrepancies between reality and the information provided to banks during the home loan application process.

Instead, many people don’t have a good understanding of their financial situation.   

“A lot of people have a rosy image of what their income and expenses are,” Mr Howen said.

“People just truly don’t know what their income and expenses [are] –probably 70 per cent of people that we deal with  – which is … the more troubling figure that I see.”

If you want to get a home loan, you need to keep track of the money coming in and out of your bank accounts – and how much debt you have, Mr Howen said.

“You need to keep track of [debt], and keep track of your expenses to really get rid of that debt as quick as you can, and that’s where people get complacent.”

I've always found the banks willing to lend far more than they should. Anyone who tries to borrow even more is asking for trouble.

Ask the bank you borrowed the money off for a copy of their application to their money lender on your behalf.
I bet that's full of falsehoods as well.

Very hard to get a copy of. The banks won't give them to you even though you have every right to have a copy.

freediver wrote on Feb 1^st, 2023 at 6:30am:


Not since the Banking Inquiry because the fallout from that sting still lingers. Also the scrutiny wrt lending procedures is very rigid and has a lot of checks and balances. And that's irrespective of the type of lender operating in Australia under Australian law.

During 2020 and 2021 <----- these 2 entire years reflected an unprecedented boom in real estate (in Australia).

Low Interest rates
Low inflation rates
Low unemployment rates
Low lending restrictions

Collectively these conditions were ALL FOR BUYING PROPERTY.

Side note : The REAL money was made in 2020 (from January through to December). If you bought up THEN you made the most profit. Why? The Australian economy was still in shock over Covid19 and the loss in confidence across all markets nationally and internationally meant a drop in their value. So IF you recognised this AND you were savvy and jumped in there and then .... you would have bought low with low interest. Of course I'm assuming loan serviceability and deposit availability etc.

But the 1 factor which stood in the way of you and property even during this time was getting all your paperwork in order and through the hoops. Every step was audited and signed off with due diligence by the very credit providers who stood to gain the real profit once the boom finished. Why? They were reeling from the banking inquiry and the subsequent findings and rulings it left behind in its wake.

Stringent reporting guidelines meant more documentation was required AND every document provided was double checked and verified. It did not matter if the credit provider was an established or a new player.

I personally tried to grab a new credit provider/player who functioned totally online. Even THERE I found they had checks and balances at every step. I wanted to borrow more in order to secure the purchase of a property outside of Sydney down the coast. I had found the home which was positioned high and with ACTUAL water views AND I had haggled the price down because the vendor had purchased elsewhere and was keen to move on the deal.

I couldn't get the lending approved. I sacked the mortgage broker I had at the time thinking they weren't trying hard enough.

By mortgage broker no 3 I realised it wasn't that. It was the actual lending industry as a whole which was still spooked by the banking inquiry AND was being rigorously spot checked by internal and external auditors. I tried taking on the role of being my own mortgage broker and used that as leverage in securing a better deal (lower fees/charges). But I couldn't get the loan for that property (it's now doubled in value).

Re lies helping to get over the line .... I tried to secure letters from real estate agents detailing positive quotes  re rental rates. I also tried to secure positive quotes re valuations. Every dollar counted so I got 3 quotes for valuation and 3 for rent figures and threw the best figures at our lenders. Again no. Fed up I demanded to speak to senior management (at head of lending level).

I threw everything I had in me to get more money. My written work was schmick. Just when I thought I was finally home I got a few calls ( many calls in fact as I had been working through just about every bloody lender in Australia by then ).

During these calls I was given a few home truths about pushing the boundaries. Essentially the professional reputation of every person and entity in the link of the chain of communication was subject to new auditing guidelines wrt risk. And any applicable penalties were harsh. The brand name was at risk of harm so that was also brought up.

It was extremely frustrating for me to hear and accept all this because I knew we would be fine with the extra borrowing.

Fast forward to today and I STILL think we would have been ok. That's despite the 5 interest rate increases and the high level of inflation and high cost of fuel etc.

Why? That property has doubled in value from that point in time plus the rental return would have increased (all rents have gone up by 10% and are still climbing because more people are looking to rent now so it's a landlord's market).

Also I had the freaking pleasure of reviewing all lenders YET AGAIN to negotiate a deal wrt locking in all our loans. I eventually succeeded in locking in our debts for 3 YEARS at 2%. <--- Incidentally that's referred to as Mortgage Heaven by industry experts.

Having said all that .... there's definitely less financial pressure on us. Less financial pressure on a person's health. That must be worth something ... yeah? Of course it is! Why? You can't put a dollar value on health! i

Kat wrote on Feb 1^st, 2023 at 3:21pm:


You could have at least asked me why I commented the way I did...Karen.