Estate agents urge buyers to lie about income to get mortgage

First-time home buyers are being encouraged to lie about their incomes by mortgage brokers in some of Britain's biggest estate agents, an investigation says today.

Undercover researchers posing as first-time buyers were told to apply for self-certification mortgages, and then to exaggerate their incomes.

Self-certification loans are aimed at the self-employed and increasing the amount earned means borrowers can get bigger loans. They allow borrowers to estimate their annual income without having to supply the traditional documentation such as wage slips.

The researchers, from the BBC's Money Programme, went into estate agents in Ealing, west London, claiming they earned £30,000 and had deposits of £35,000 and wanted to buy a one bedroom flat.

Mortgage brokers in nine out of the 10 estate agents encouraged them to apply for the self-certification loans and lie about their income in order to be able to afford a flat. In one case this would increase the amount the researcher was able to borrow from £150,000 to £220,000.

In Didsbury, Manchester, three out of seven mortgage advisers recommended that people exaggerate their income.

The researchers also visited three high street branches of Birmingham Midshires where they were offered self-certification mortgages above the 3.25 times income multiple that the group allows.

The Money Programme said one adviser boasted that he had helped someone with an income in the low £30,000s to borrow £340,000, for which his income should have been £104,000.

Birmingham Midshires said on Monday it had suspended the three advisers while it reviewed the allegations. It has also temporarily stopped offering self-certification mortgages through its 67 branches and recalled all its advisers for retraining.

Another estate agent, Haart, also suspended a member of staff pending an investigation. Haart's chief executive, Paul Smith, said: "We would like to make it clear that we do not condone any inappropriate practices."

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

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

Industry experts have expressed concern that some people taking out large self-certification loans could be vulnerable to a downturn in the economy or a sharp rise in interest rates.