Canadians are finding that it has become increasingly difficult to qualify for a mortgage lately, especially after several mortgage stress tests were implemented. In relation to this, a recent Equifax Canada survey revealed that a lot of Canadians are willing to commit fraud if it meant qualifying for a mortgage.
Mortgage fraud is when a person, a real estate agent, a lawyer, or a mortgage broker or agent, exaggerates, misrepresents, or lies about information to obtain a mortgage that wouldn’t have been approved if the applicant’s true information was shared.
The recent Equifax Canada survey revealed that millennials are at double the risk of lying about their annual income as compared to the general population, as shared by Equifax Canada director of consumer advocacy Julie Kuzmic. She voiced out that it is concerning to note that young adults see no issues with inflating their income in order to buy the home they want. Note that any attempt to misrepresent data when applying for a mortgage is fraud. When people take mortgages that may be too high for their real income, they could end up having trouble paying and have more debt.
It Won’t Hurt to Be More Careful
Failing to pay mortgage payments in full and on time can have a marked negative income on credit scores and credit history. A small lie during the mortgage application process can have severe legal consequences later when the lying party realizes the repercussions of having a mortgage that one cannot afford. Equifax Canada wanted to share this information to the public to stop them from making mistakes that can have a severe negative impact on their credit history.
The recent survey further revealed that the majority of respondents do think that mortgage fraud is a growing problem. It also brought to light the fact that most consumers are not checking their credit scores prior to deciding to apply for a mortgage. 60% of the respondents admitted to not checking their credit scores before contacting a lender for a mortgage. This number is high, but a bit lower than the 68% who said the same in a similar survey in 2014.
Kuzmic says that mortgage lenders tend to examine credit scores closely, along with information such as income to have a better assessment of an individual’s ability to pay back a loan. Having a spotty credit history certainly won’t help and will probably mean getting a higher interest rate.
Stressed About Stress Tests
About half, or 48% of the respondents shared that they think the government should relax the mortgage stress test for first-time buyers. 38% shared that they think the government should simply eliminate the stress test.
By Haywood Hunt & Associates Inc.