Mortgage lies

Tobecontinu

Hello. I've been talking to a lot of people about getting a mortgage recently. Some have told me that when they were getting their mortgage, their employers said they were working full time when in fact they were working part time and there were some other lies told also! This was amongst people from an older generation mostly. Was this a common theme back then? Is it still common now? What can banks do to stamp out this kind of thing? What checks to they have?

banie01

Checking applicants bank accounts and p60s gives a fairly clear picture of income.
In the recent pass a lot of banking applications were done with nod so much a nod and a wink but a degree of "flexibility"

From loans that were called "gifts" or to just accepting an employer stamped income cert that claims overtime rates as "normal" salary.

Those options are far less likely to fly these days.
Also it's not an "older" generation that were at it, it was fairly standard practice up to 2009.

Tobecontinu

banie01 wrote: »

Checking applicants bank accounts and p60s gives a fairly clear picture of income.
In the recent pass a lot of banking applications were done with nod so much a nod and a wink but a degree of "flexibility"

From loans that were called "gifts" or to just accepting an employer stamped income cert that claims overtime rates as "normal" salary.

Those options are far less likely to fly these days.
Also it's not an "older" generation that were at it, it was fairly standard practice up to 2009.

But how has it changed? Do the banks do more stringent checking or are employers less likely to go along with things?

naughtysmurf

Many years ago it certainly did go on to an extent, on our first mortgage application a mortgage broker we used submitted a false P60 & payslips, nowadays I'd say it's pretty rare, bank checks are significantly more stringent

hanaimai

There are more regulations these days whereas there were feck all before the financial crisis. There are more rules around what banks have to assess before giving out mortgages and that they have to properly verify the information provided etc. There's also more monitoring of the kind of lending banks are doing, to make sure they aren't being too risky basically.

There was a case recently where a couple narrowly avoided jail (I think they were fined instead) after they provided falsified salary certs. So it's rare but it still happens.

naughtysmurf

I'm pretty sure we didn't have to provide bank statements, back in the day a lot of people were paid in cash so bank statements weren't as important as they are now except for showing an ability to save, so I'd imagine payslips & p60's were more easily manipulated, not so easy to do nowadays

banie01

Tobecontinu wrote: »

But how has it changed? Do the banks do more stringent checking or are employers less likely to go along with things?

banie01 wrote: »

Checking applicants bank accounts and p60s gives a fairly clear picture of income.

Couple that with tighter regulation and income to loan limits.

Trish56

Regarding Income when applying for a mortgage you need to submit 3 months recent payslips, most recent P60 and an income certificate completed by your employer.

You also have to submit 6 months recent current account, savings, credit card statements and 12 months statements for any short term borrowings. Any unusual lodgments or withdrawals must be explained when submitting the loan application.

On Income, the net amount on the 3 months pay slips are crossed checked to see that the amount corresponds with the transfer to the current account. The gross basic salary on the Income Certificate has to correspond with the gross basic salary on the payslip and must also be matched with the P60. Any differences has to be explained.
All transactions have to have a paper trail on the bank statements and paying rent must be reflected in the bank statements.

Definitely a huge change since Celtic Tiger days.

L1011

Tiger era I had a bank staff member write in the then current rent-a-room limit as 'extra income' despite not being asked to and me having no intention of doing so. Didn't draw down that loan thankfully!

There is room for some small bits of tricking here and there but it’s certainly a lot tighter than before.

For example I applied for a mortgage a few years ago (before things picked up and the lending rules were active at the time so it was strict) and HR in my job at the time wrote a letter saying my contract was definitely going to be extended into the future but they could in no way guarantee this as it wasn’t up to them. I didn’t actually go through with the mortgage at the time though.