So you’ve managed to come up with the cash for a home loan deposit – congratulations. What could possibly go wrong? Plenty as it turns out if you choose to lie on the application form
For many potential home owners, securing a home loan these days can feel a little daunting. Specifically, if you don’t feel confident about a particular aspect of your finances, you may be tempted to get a little “creative” on your application form in order to make everything look hunky dory.
However needless to say, telling a bunch of lies to a lender is never a good idea! It’ll only make the process really awkward when the truth is uncovered and will just slow everything down. Fessing up should make the process easier and will ultimately help you find the right loan for your situation.
Here are the five whoppers which won’t do you any favours.
1. Don’t lie about your finances – even if it looks bad
If you owe money, have missed bill payments, pretend you earn more than you do, or have scary credit card debt then it’s time to get honest says State Custodians’ senior manager Anouska Linz. “In particular, people tend to omit information about interest-free cards,” she says. “They say, ‘Oh yeah I’ve got one but that’s just an interest free thing so I didn’t put it on the application’. But during the process there is a credit check. If what you’ve said doesn’t match up with your debts or card history, then your loan may get declined and getting other loans will be potentially affected.”
Anouska says if you do have bad debts it’s important not to freak out. “People might panic and lie, assuming if they have bad credit they’ll never get a loan, but that’s not the case,” she says. “Bad credit loans are available and quite similar to a regular loan. We just want to see that whatever happened to get you into that situation isn’t going to happen again.”
2. Don’t pretend you don’t have kids!
Would you believe people actually lie on application forms about how many kids they have? “A lot of people think they’re a bit savvy and know that the number of kids they have changes the money estimation of their living expenses, so they will lie about it,” Anouska says. “They say they’ve only got two kids, but they really have three or four! However, as part of the ID process we ask to see their Medicare card which states how many kids people actually have. People often feel pretty silly afterwards!
“There is absolutely no point in lying as the truth will come out anyhow when we check all your records. Whatever your circumstance there is usually a solution so it’s best to be honest and get the right loan for your needs.”
3. Don’t tell fibs about foreign debts and assets
Getting your paperwork wrong either with innocent mistakes or deliberate ones is a big no-no. Anouska says one mistake that comes up is when people try to hide their overseas assets or debts racked up whilst working overseas. “They fill out the Australian part of the paperwork correctly, but don’t tell us about their overseas situation. However, you can often see on their bank statements what’s going on.
“As in you might see rental income coming in and then find out they actually have a rental property in the UK. Not declaring everything slows the process down unnecessarily.”
4. Don’t conceal multiple applications
Inquiring with heaps of different lenders for pre-approval can create one big sticky mess. “This was happening when the first home owners grant was more prominent,” says Anouska. “Young people were applying for pre-approval with a number of lenders at the same time to find out who would lend them the most, and sometimes not disclosing it.
“Doing this would result in lots of credit enquiries as well as delaying the process, as the lender could stop their assessment then ask for written confirmation that you are not proceeding with the other lender. It can stall the whole process and can actually mess up your credit report.”
5. Don’t say you’ll be around during the application process and then disappear overseas
If the whole house-hunting experience has left you exhausted and in need of a holiday, then no one would blame you. Just don’t go on holiday before your place settles! “We have heaps of people who buy a property and give you the impression they’re contactable, but half way through between exchange and settlement they go away on an overseas trip,” says Anouska.
“Not being around can be a problem if issues arise and your signature, instructions or approval are required. At worst, the purchase may be delayed which means the borrower is up for penalty interest. Likewise, if there is a shortfall at settlement on a purchase or refinance, the sale may not proceed if you can’t be contacted.”