'Lie about salary' homebuyers told

THOUSANDS of homebuyers are being encouraged to lie about their income in order to take out a bigger mortgage, it has been claimed.

Mortgage brokers from major estate agencies have been accused of telling customers to apply for a self-certification mortgage, aimed at the self-employed, so they can exaggerate how much they earn.

The revelations follow an undercover investigation by the BBC's Money Programme, which sent out researchers posing as first-time buyers to estate agents in West London.

Despite claiming they earned £30,000 and had deposits of £35,000, nine out of the 10 estate agents visited suggested they apply for a self-certification mortgage and lie about their income, in order to borrow more to buy a flat.

In one case revealed, a researcher was encouraged to inflate his income to increase the amount available to borrow from £150,000 to £220,000. One adviser even boasted that he had helped someone with an income of less than £40,000 to borrow £340,000, for which his income should have been £104,000.

Lenders will typically offer around 3.25 times income. Borrowing more than this increases the risk of not being able to meet your mortgage payments if interest rates rise.

Halifax, the UK's largest mortgage lender, has been implicated in the scandal. Mortgage advisers from subsidiaries Bank of Scotland, Birmingham Midshires and The Mortgage Business are among those accused of telling customers to commit fraud.

A spokesman for Birmingham Midshires said it had temporarily stopped selling self-certification mortgages from its branches. It is also recalling all advisers to be retrained.

One of the estate agencies involved in the research was Haart, which has also suspended a member of staff pending an investigation.

Haart chief executive Paul Smith said: 'We cannot comment further on this particular case until we have the result of the investigation. However we would like to make it clear that we do not condone any inappropriate practices. We are committed to maintaining the highest standards of advice and consumer care.'

Michelle Vosper, of the Council of Mortgage Lenders, said lying on an application form was mortgage fraud, which was a criminal offence.

She added: 'We haven't had any indication from the Mortgage Code Compliance Board that this is a particular issue.

'They have recently done 3,000 visits to lenders for compliance issues and that's not something they picked up.'

She said self-certification mortgages made only a tiny proportion of the overall market, estimated to be less than 1%.