Not being truthful on your loan application form has consequences

If you have been tempted to lie or withhold important information from your home loan application, you are not alone. The problem is that since you are loaning such a large amount of money, the lenders will check and verify all your details. This could lead to some dire consequences, that could derail your finances and your reputation.

Lying or not being truthful about your financial position is fraud. Lenders can, and do, institute criminal charges against these applicants. If the application has been approved, lenders can cancel the home loan agreement and may even list the fraud on ITC.

Home loan fraud

Home loan fraud comes in many different forms, some of the most common include inflation of your income, identity theft, false employment records and not disclosing all your debt obligations. In a Property 24 article, Berry Everitt, CEO of the Chas Everitt International property group, said “There are 101 varieties of mortgage fraud. And the real scale of the problem is only just beginning to emerge, but in most cases the lender is definitely at risk in these schemes. If you add this worry to the restrictions of the National Credit Act (NCA), it’s really no wonder that the banks are much more wary about lending than they were previously.”

False information on your home loan application

It is fraud and fraud is a serious crime. People have gone to prison for providing falsified home loan information. If they weren’t sentenced to prison, they faced costly legal fees and fines. Although this doesn’t happen often – it does happen.

The bank can reject your home loan

If you are still in the process of applying, the lender can reject your home loan application with immediate effect. This is not good because it could be the lender that was willing to offer you the best home loan deal. Furthermore, you will tarnish your reputation with that lender, so you won’t be able to apply with them again, or they will hike up your interest rate because they will see you as a high-risk applicant.

You must pay back what you owe immediately

If your home loan has been approved and you are already paying it off, the lender can expect you to pay the outstanding money back immediately. This could leave you in a very difficult financial situation.

You could face financial hardship

If the lender doesn’t pick up that you weren’t truthful on your application form, you could default on your repayments. The application process is in place to make sure you can afford the repayments. When you lie, you put yourself in a dangerous position – one where defaulting is more likely, unless you have family to fall back on if things go wrong.

Buying a home is not an every day event, and you should see it as that. The lenders have invested many hours into their application processes to make sure applicants can afford the home loan repayments. It’s better to align with their requirements so that when you finally move into your home, you have the peace of mind knowing that you are financially secure enough to afford it.

Yes, life happens. Retrenchments happen. Death happens. But with all the right insurances in place, you will be protected and your home will stay your home through all the ups and downs of life.