Quarter of first time home buyers will hide their student debts from mortgage providers
Nearly a quarter (22 percent) of first-time home buyers plan to hide their student debts when applying for a mortgage, according to research by Viisi Hypotheken. Doing so can have major consequences if you’re caught, including having to repay your mortgage at once and being added to the fraud register, Hergen Dutrieux of Viisi Hyptheken told the Telegraaf.
The mortgage provider surveyed 1,030 young Dutch people who want to buy their first home. Half of them said that they only have a serious chance of buying a home if they do not declare their student debt.
Most of the young people who plan to hide their student debt have high debt between 30,000 and 50,000 euros, or a low one of 5,000 euros or less. In the category in between, 15 percent plan to not declare their student loans when applying for a mortgage.
“Even a small debt can potentially have a significant impact on your maximum mortgage amount,” said Dutrieux. “In a market where every little helps, that can sometimes mean the difference between buying a first home or not. I understand that first-time buyers are desperate, but instead of keeping quiet, there are also alternatives like accelerated repayment, with or without the help of family and friends.”
Almost 40 percent of the respondents said they know someone who hid their student debt or is planning to do so. “We have set up the mortgage process in such a way that people who are honest about their student debt suffer disproportionately from it. Student loans are income-dependent and, therefore, the risk of default is small. There is something to be said for ignoring especially the smaller amounts,” Dutrieux said.
If a mortgage provider discovers undeclared student debt, they can demand the entire mortgage amount paid in one go. They can also register the person involved in the national fraud register, which could make future loans and the National Mortgage Guarantee more difficult.
