What is mortgage fraud?
Key takeaways
Mortgage fraud involves deliberately giving false or misleading information on a mortgage application, and it’s a criminal offence in the UK.
It takes many forms, from overstating income or hiding debts to identity theft and professional malpractice.
Being honest, checking your details carefully and acting quickly if you spot a mistake or suspicious activity can help you avoid serious legal and financial consequences.
What is mortgage fraud?
Mortgage fraud is when someone deliberately provides false, misleading or incomplete information to obtain a mortgage they would not otherwise qualify for.
It covers a range of different activities, from overstating income or hiding debts to property valuation scams and organised criminal schemes.
It isn’t always the borrower who is culpable. You could be a victim of mortgage fraud through identity theft, or suffer losses due to malpractice by a broker, solicitor or other professional involved in the process.
Mortgage fraud, which also covers remortgaging and product transfers, is a criminal offence in the UK and can lead to prosecution, fines, confiscation of assets and imprisonment.
What are the most common types of mortgage fraud?
There are various different types of mortgage fraud, including:
Income fraud
What is it? Deliberately overstating income or falsifying employment details to qualify for a larger loan.
How might it happen? A borrower alters payslips or submits inflated self-employed accounts to meet a lender’s affordability checks.
Hiding debts or adverse credit
What is it? Failing to disclose loans, credit cards, CCJs or an IVA to make finances appear stronger.
How might it happen? An applicant omits a personal loan from their application so their debt-to-income ratio looks better than it is.
Deposit fraud
What is it? Misrepresenting the true source of a deposit.
How might it happen? A buyer claims the deposit is a gift from family when it is actually a repayable loan.
Occupancy fraud
What is it? Lying about how the property will be used.
How might it happen? An applicant applies for a residential mortgage with lower rates while intending to rent the property out – and avoid the higher costs of a buy-to-let mortgage.
Valuation fraud
What is it? Artificially inflating a property’s value to secure a larger mortgage.
How might it happen? A seller and complicit valuer agree an exaggerated valuation so the buyer can borrow more than the property is worth.
Identity theft
What is it? Using someone else’s personal details to apply for a mortgage.
How might it happen? A fraudster uses stolen documents to secure a mortgage in another person’s name, leaving the victim unaware.
Professional or third-party fraud
What is it? Fraud committed by brokers, solicitors or other professionals involved in the transaction.
How might it happen? A rogue broker submits altered financial documents without the client’s knowledge to push an application through.
What are the consequences of mortgage fraud?
Mortgage fraud can have serious legal and financial consequences. If discovered, a lender may withdraw a mortgage offer, demand immediate repayment or repossess the property.
Cases can be reported to the police and prosecuted, potentially leading to a criminal record, fines or even imprisonment. A fraud marker may also be placed on your credit file, making it extremely difficult to obtain future credit, mortgages, bank accounts or even some jobs in financial services.
What is a fraud marker?
A CIFAS fraud marker is a warning placed on your credit file by a member organisation (such as a bank or lender) if they believe false information was provided or fraudulent activity has taken place.
There are different types of markers. A first-party fraud marker may be recorded if a lender believes you deliberately misled them on an application. A victim of impersonation marker can be added to help protect you if your identity has been misused.
Most CIFAS markers remain on your file for six years. During that time, lenders will see the flag when you apply for credit, which can make borrowing more difficult.
If you believe a marker has been added unfairly, you can challenge it with the organisation that recorded it and escalate to the Financial Ombudsman Service if necessary.
Can you commit mortgage fraud accidentally?
Strictly speaking, mortgage fraud involves deliberate dishonesty, so you cannot commit it accidentally.
However, providing incorrect or incomplete information on a mortgage application – even by mistake – can still have serious consequences.
A lender may withdraw your offer, amend the terms or refuse future applications. If the error appears reckless or you fail to correct it when given the chance, it could raise suspicion and lead to further investigation.
Is “a small lie” on a mortgage application mortgage fraud?
Yes. Even a small lie on a mortgage application can amount to mortgage fraud if it involves deliberately providing false or misleading information to influence a lender’s decision.
Examples of a “small” lie might include slightly overstating your salary, failing to mention a credit card or personal loan, saying a loan has been repaid when it hasn’t, claiming a deposit is a gift rather than a loan, or stating you’ll live in the property when you plan to rent it out.
What information do lenders check for accuracy?
When applying for a mortgage, lenders want to make sure you provide the correct details. They may check the following information for accuracy
Income and employment. Salary, bonuses, self-employed earnings and length of employment
Bank statements. Regular spending, including gambling and subscriptions
Existing debts. Credit cards, personal loans, car finance and Buy Now Pay Later
Credit history. Payment record including any defaults, CCJs or IVAs
Deposit source. Savings, gifted deposits or other funding
Property use. Whether you’ll live in it or rent it out
Personal details. Address history and identity documents
How far back do lenders check your financial history?
In the UK, lenders typically look back six years when reviewing your financial history, as this is how long most adverse credit information – such as missed payments, defaults and CCJs – remains on your credit file.
However, lenders will also usually ask for three to six months of bank statements, assess your current income and employment, and review your address history. If you’re self-employed, they may request two to three years of accounts or tax returns.
How can you avoid mortgage fraud when applying?
You can avoid mortgage fraud by being completely accurate and honest on your application. Double-check your income figures, debts, deposit source and intended use of the property before submitting anything, and correct mistakes promptly if you spot them. Never be tempted to round up salary details or omit credit commitments, even if you think it won’t matter.
Just as importantly, make sure the professionals you work with – such as brokers or advisers – are acting properly. Ask questions if you don’t understand something, read documents carefully before signing and challenge anything that seems designed to bend the rules.
Can I be declined for innocent mistakes?
Yes, you can be declined for a mortgage because of an innocent mistake.
If incorrect or incomplete information affects how a lender assesses affordability or risk – for example, understated debts, the wrong income figure or missing address history – they may withdraw or refuse the application. Even simple errors can trigger automated fraud checks or underwriting concerns.
If you realise you’ve made a mistake, contact the lender or broker immediately to correct it. Being open and proactive can help avoid misunderstandings and reduce the risk of longer-term issues.
What if a broker or solicitor submitted incorrect information?
If a broker or third party submits incorrect information on your behalf, you are not automatically guilty of fraud – but you are still responsible for the accuracy of your application.
Contact the lender immediately to clarify the mistake and provide correct details in writing. If the error was made without your knowledge, explain this clearly and keep copies of all communications.
If you believe the broker acted improperly, you can complain to the firm first. If unresolved, escalate to the Financial Ombudsman Service. You can also check whether the firm is authorised by the Financial Conduct Authority.
Is it mortgage fraud if I rent my house out while having a residential mortgage?
It can be. If you have a residential mortgage, you’ve agreed that the property will be your main home. Renting it out without telling your lender, known as “consent to let” fraud, can breach your mortgage terms and may amount to mortgage fraud if you deliberately misrepresented your intentions when applying.
However, there are legitimate routes. You can ask your lender for consent to let (often granted temporarily) or switch to a buy-to-let mortgage if you plan to rent the property longer term. Always inform your lender before letting the property to avoid serious consequences.
What are the warning signs of mortgage fraud?
Mortgage fraud linked to identity theft can go unnoticed until significant damage has been done, so spotting the warning signs early is crucial.
Things to watch out for include:
Letters addressed to you about a mortgage or property purchase you don’t recognise
Credit checks appearing on your file from lenders you haven’t approached
Being declined for credit unexpectedly
Changes to your credit report, such as a new address you’ve never lived at
Missing post or unfamiliar bank statements
To minimise the chances of mortgage fraud happening to you, regularly check your credit report and act quickly if something looks wrong.
What should I do if I’m worried I could be a victim of mortgage fraud?
If you’re worried you may be a victim of mortgage fraud, act quickly. Contact your mortgage lender immediately and explain your concerns. Check your credit report for unfamiliar applications or addresses and consider registering for protective monitoring.
You should report suspected identity fraud to Report Fraud (formerly Action Fraud), the UK’s national reporting centre, and inform CIFAS to add protective registration, a free service that flags your credit file as at risk of identity fraud.
If you’re concerned that information on your application was inaccurate – or your circumstances have changed – tell your lender as soon as possible. Prompt disclosure can prevent misunderstandings and reduce the risk of more serious consequences.
Can fraud happen during conveyancing?
Yes. Fraud can occur during the conveyancing process, particularly around the transfer of large sums of money.
Criminals may intercept emails between you and your solicitor and send fake messages with altered bank details, tricking you into transferring your deposit or completion funds to a fraudulent account.
To protect yourself, always verify bank details directly with your solicitor, be wary of last-minute changes and avoid sending sensitive information over unsecured email. If you suspect fraud, contact your bank and solicitor immediately.
Can a mortgage broker help you stay compliant?
Yes. A reputable mortgage broker can help you stay compliant by explaining what lenders require, checking your documents for accuracy and ensuring your application is complete and transparent. They should highlight risks, clarify deposit rules and flag inconsistencies – but you remain responsible for confirming that all information submitted is truthful.
How can I protect myself from mortgage fraud?
You can protect yourself from mortgage fraud by taking a few practical precautions:
Check your credit report regularly to spot unfamiliar searches, addresses or applications
Report lost or stolen ID documents immediately and consider protective registration with CIFAS
Sign up to the HM Land Registry Property Alert service to receive email alerts if someone tries to change the details of a property you own
Secure personal information by shredding sensitive post and using strong, unique passwords
Be cautious with unsolicited calls or emails about mortgages or property investments
Personal Finance Expert
Our expert says…
Mortgage fraud is something borrowers should take seriously, but it’s not something to be frightened of if you approach your application in the right way. The key is to be honest and thorough from the outset – make sure every detail you provide is accurate and complete. If you spot a mistake or something that doesn’t look right, act quickly and tell your lender. Being proactive and transparent is always far better than ignoring a potential problem"
Your home may be repossessed if you do not keep up repayments on your mortgage.
Author
Tim Heming
Personal Finance Expert
Tim Heming is a journalist and editor who has written about personal finance for national newspapers and consumer websites for 15 years. Tim enjoys providing no-nonsense information to help consumers...
Reviewer
Alan Cairns
Senior Content Editor
Alan helps MoneySuperMarket break down complicated financial topics into plain English, to help you find the right deals. When he’s not writing or editing you might find him cycling the South Downs.
