Mortgage fraud is a serious subject, but it does not always begin with an organised criminal operation or someone deliberately setting out to defraud a bank.
Sometimes, it begins with a seemingly small suggestion:
“Can we leave that loan off the application?”
“My actual income is higher than the figure on my payslips.”
“Could we say the property will be my main residence?”
“The deposit is coming from a family member, but do we really need to mention it?”
When someone is emotionally invested in buying a property, these may feel like minor changes that could help their mortgage application get over the line.
From a mortgage broker’s perspective, however, they can fundamentally change the accuracy of an application and potentially cross the line into mortgage fraud.
What is mortgage fraud?
Mortgage fraud generally involves deliberately providing false, incomplete or misleading information to a mortgage lender to obtain borrowing or more favourable mortgage terms.
The FCA identifies examples including encouraging applicants to inflate their income, providing false employment details and using false documents such as payslips, bank statements or accountant references.
Examples of mortgage application fraud can include:
- Inflating income or providing incorrect employment information
- Altering payslips, bank statements, tax documents or company accounts
- Failing to disclose loans, credit commitments or other financial liabilities
- Giving an incorrect explanation of where a mortgage deposit has come from
- Presenting borrowed money as personal savings or an unconditional gift
- Applying for a residential mortgage while intending to rent out the property
- Applying for a buy-to-let mortgage while intending to live in the property
- Misrepresenting the purchase price, ownership or intended occupants
- Failing to disclose incentives or arrangements connected to the purchase
- Using false identification or allowing another person to use your details
Cifas has also highlighted false income information and altered payslips or P60s as common features of fraudulent mortgage applications.
Mortgage fraud is not limited to fake documents
There is a common misconception that mortgage fraud only takes place when someone creates a fake payslip or physically alters a bank statement.
That is not the case.
A mortgage application can be misleading even when every document provided is genuine.
For example, an applicant may provide legitimate payslips but fail to disclose that they have handed in their notice or expect their income to reduce. A deposit may genuinely be held in the applicant’s bank account, but the money could have come from an undisclosed loan.
The lender needs an accurate overall picture of:
- The applicant’s income and employment
- Existing financial commitments
- The source of the deposit
- Who will own and occupy the property
- How the property will be used
- Any incentives or financial arrangements connected to the transaction
The issue is not simply whether each individual document is genuine. The information given to the lender must be accurate and must not create a misleading impression.
A mortgage broker should not “make the case fit”
A good mortgage broker will look for the most suitable way to present a client’s genuine circumstances.
That may involve finding a lender that understands company directors, contractors, self-employed applicants, portfolio landlords, foreign nationals or clients receiving income from overseas.
Many circumstances that initially appear difficult can have legitimate mortgage solutions.
What a broker cannot do is change the facts to fit a lender’s mortgage criteria.
There is an important difference between presenting a case properly and misrepresenting it.
For example, explaining why a company director’s latest trading figures provide a more accurate reflection of the business may be entirely reasonable. Increasing the applicant’s stated income because the genuine figure does not support the required borrowing is not.
A mortgage broker’s job is to present the strongest possible version of the truth, not to change it.
Why do mortgage brokers ask so many questions?
Clients can sometimes feel that their broker or lender is requesting an excessive amount of information.
Why does the lender need to see how the deposit built up?
Why are transfers between bank accounts being questioned?
Why does the broker need information about a loan that will be repaid before completion?
Why is the lender asking about a recent increase in salary?
These questions are not designed to make the mortgage process unnecessarily difficult.
A mortgage is a significant financial commitment. The lender needs to assess whether the borrowing is affordable, whether the information provided is accurate and whether the transaction makes sense.
Your broker also needs to understand the full circumstances before recommending a lender. A clear explanation at the beginning can prevent delays, further questions or problems later in the application.
“Everyone does it” is not a defence
Mortgage fraud can become normalised when applicants receive poor advice from friends, family members, property professionals or unregulated individuals.
They may be told:
“The lender will never know.”
“Just move the money between accounts.”
“Everyone increases their income slightly.”
“Do not mention that you plan to rent the property out.”
This advice should be treated as a serious warning sign.
Research published by Cifas in 2024 found that one in six UK adults surveyed said they or someone they knew had misled a mortgage company about their salary. The research also identified a willingness among some people to exaggerate earnings or use forged payslips to obtain a mortgage.
The fact that other people may have done something does not make it acceptable or remove the potential consequences.
Mortgage lenders may compare information against bank statements, credit records, tax documents, Companies House information, previous applications and fraud prevention databases.
A discrepancy may not only affect the application currently being considered. It could create wider difficulties when applying for mortgages, loans or other financial services in the future.
What are the consequences of mortgage fraud?
The consequences of providing false or misleading information on a mortgage application can be serious.
Depending on the circumstances, they may include:
- The mortgage application being declined
- A mortgage offer being withdrawn
- The lender refusing to consider future applications
- The broker ending the professional relationship
- Information being recorded with a fraud prevention organisation
- Difficulty obtaining future mortgages, banking facilities or credit
- The matter being reported to the relevant authorities
- Criminal investigation or prosecution
- Regulatory or criminal action against any professional who knowingly participated
Fraud by false representation is an offence under the Fraud Act 2006. The maximum sentence following conviction on indictment can be up to ten years’ imprisonment, a fine or both.
The FCA has previously brought cases involving false mortgage applications supported by inflated income and fabricated employment or self-employment documents.
What if incorrect information was provided by mistake?
Not every inconsistency is mortgage fraud.
Genuine mistakes happen.
An applicant may forget about an old credit agreement. An employer may make an error on a payslip. An accountant may correct previously submitted figures or a client may misunderstand a question on an application form.
The important point is to raise the issue as soon as it becomes known.
Trying to hide a mistake can turn a manageable problem into a much more serious one.
Depending on the circumstances, a mortgage broker may be able to:
- Correct the information before submission
- Explain the discrepancy to the lender
- Provide updated or supporting documents
- Restructure the application
- Recommend a lender with more suitable criteria
- Advise the client to wait before proceeding
Being transparent gives your broker the opportunity to consider the available options. Concealing information removes those options and may place everyone involved in a difficult position.
Be careful who handles your mortgage documents
Applicants should be cautious about sending personal and financial documents to unregulated individuals.
Someone may present themselves as a person who can “arrange” a mortgage or guarantee approval, then alter documents or provide inaccurate information without the applicant fully understanding what has been submitted.
Before working with a mortgage adviser, check that the adviser and firm are appropriately authorised or are operating under an authorised firm.
You should also:
- Read your mortgage application carefully
- Check that income and employment figures are correct
- Confirm that all financial commitments have been disclosed
- Make sure the source of your deposit is accurately recorded
- Never approve information that you know is incorrect
- Keep copies of documents and correspondence
You remain responsible for the information provided in your name, even when someone else completes the application for you.
Why use London FS for your mortgage?
At London FS, we believe a mortgage application should be built around the client’s genuine circumstances, not reshaped to fit a lender’s criteria.
We regularly advise clients with both straightforward and complex mortgage requirements, including:
- Company directors and self-employed applicants
- Contractors and professionals with complex income
- Portfolio landlords and property investors
- Foreign nationals and expats
- Applicants receiving overseas or multiple income streams
- Clients requiring larger residential or commercial mortgages
Our role is to understand the complete picture, identify potential issues early and approach lenders whose criteria and underwriting style are more likely to suit the case.
As an independent and directly authorised mortgage brokerage, we can consider options across high-street banks, building societies, specialist lenders and private banks.
This broader access can be particularly valuable when a client’s circumstances do not fit a standard automated lending model.
We will never encourage a client to leave out information, alter a document or provide an explanation that does not reflect the true position.
Equally, we do not assume that a complicated mortgage application cannot be placed.
Where a suitable solution exists, we will work to identify it and present the case clearly and professionally. Where the borrowing is not currently achievable, we will explain why and discuss the practical steps that may improve the position.
Sometimes our advice may be to reduce the borrowing, restructure the transaction or wait until the application is stronger. That may not always be the answer someone hopes to hear, but honest advice at the outset can prevent far greater problems later. We cannot guarantee that every mortgage application will be accepted. What we can do is carefully assess the circumstances, prepare the case properly and provide clear advice about the available options.
Frequently asked questions about mortgage fraud
Is exaggerating my salary on a mortgage application fraud?
Knowingly providing an inflated income figure to obtain a mortgage may amount to mortgage fraud. The income entered on an application should be accurate and supported by appropriate evidence.
Can I leave a loan off my mortgage application if I plan to repay it?
You should disclose the commitment to your mortgage broker. The lender may still need to consider it, even if it will be repaid before completion. Your broker can explain the repayment arrangements and check the relevant lender’s requirements.
Is an undisclosed gifted deposit mortgage fraud?
A genuine gifted deposit is not mortgage fraud, but its source and terms must be accurately disclosed. The lender and solicitor will usually need to confirm who is providing the gift and whether the donor expects repayment or an interest in the property.
What should I do if someone asks me to alter a mortgage document?
Do not alter the document or allow someone else to alter it. Speak to an appropriately authorised mortgage adviser and provide the genuine information. There may be a legitimate alternative solution based on your actual circumstances.
Can an error on my mortgage application be corrected?
In many cases, a genuine mistake can be corrected. Tell your broker immediately so that they can assess the issue and notify the lender where necessary. The outcome will depend on the nature and significance of the error.
Speak to an experienced mortgage broker
Complex income, unusual deposit arrangements or a complicated financial background do not automatically prevent someone from obtaining a mortgage.
The key is to be open about the circumstances from the beginning.
At London FS, we take the time to understand each application before recommending an appropriate lender. We will explain what is achievable, identify any potential concerns and ensure that the application accurately reflects the client’s position.
For advice about a residential mortgage, buy-to-let finance, commercial borrowing or a more complex mortgage application, contact the London FS team.
Final thoughts
Mortgage fraud is not a harmless shortcut or simply a technical breach of a lender’s criteria.
A mortgage application depends on trust. The lender relies on the borrower, broker and other professionals involved to provide complete and accurate information.
From a broker’s perspective, our role is to explain complexity, challenge incorrect assumptions and find a lender whose approach is appropriate for the client’s genuine circumstances.
What we cannot do is change the truth.
When clients are honest with their mortgage broker from the outset, including about matters they believe may harm the application, there is a much better opportunity to identify a responsible and sustainable way forward.
This article is intended to provide general information only and does not constitute legal or financial advice. Mortgage availability and lending decisions depend on individual circumstances and the lender’s criteria.Your home may be repossessed if you do not keep up repayments on your mortgage.
