Self-cert mortgages no longer exist or at least in the format they did a few years ago. Today there are much tougher requirements for the self employed who in 2011 must now produce two or three years audited accounts. For those borrowers who previously qualified under ‘self-cert’ and the self-employed wanting to transfer to interest-only mortgages may well find themselves unable to move property.
The FSA has advised that only borrowers who CAN afford the repayments should be given loans, this in effect, means the end of self-certification mortgages.
There are 2010 testimonials on some self cert websites claiming that newly self- employed who felt they were not viable in the current market have been given self cert mortgages.You have to wonder what kind of deals they are getting, as these mortgages don’t exist any more, however some lenders still insist that self cert loans are available at over five times your income.
Self Cert Mortgages / Self Employed Mortgages How it worked
During a normal mortgage application it was likely that you would be asked if for your accounts if you were a self-employed applicant. This presented a problem to potential borrowers as many successful self employed owned companies have been running for less than three years, the ability to pay your mortgage is often no use to the lender if you could not provide accounts provided by a certified accountant, even if you have a substantial deposit this by no means guaranteed you a mortgage acceptance. This of course was a huge money pit noticed by mortgage lenders and encourage them to provide a mortgage package for the self-employed, in the past the its Self-Employed had been looked down on by the finance industry but as a result of a increase in self employment in the 1980s we have got this position.The self cert mortgage works in this way, you the applicant did play our own accounts using your incoming and outgoing figures, this is then presented to the lender and taking and a trust basis, of course and this sounds all too easily and it doesn’t always run as smoothly as it sounds, one big obstacle to overcome is the deposit of at least 20 per cent is required, and also illustrates that you have capital behind you as result business profits.
So in essence a self cert mortgages allowed you to self certify your income without providing the obligatory financial information usually required by a mortgage lender.
Of course this was a mortgage for people who have problems getting finance and it would be expected that you would pay a higher rate of interest than you would with a standard mortgage.
So if you were in a position to provide a substantial deposit and can demonstrate that you can easily afford the repayments then you would have no trouble attaining a self cert mortgage as they had been running for many years and were well established in the mortgage market.
most mortgage companies had fast-track procedures for getting self Cert mortgages and were proficient in arranging such deals
just because Self Cert Mortgages were a relatively unusual package it meant they didn’t have the same variations as a regular mortgage for example variable, fixed, and capped rates were available as well as discount rate mortgages, self cert remortgages were also available and were probably easy to get as you didnt need a deposit to release equity in your existing property.
Having and Adverse, bad or poor Credit can affect your chances of getting a mortgage but in most cases it only means having to pay a higher rate of interest.
The main idea for a self-certification (or self cert) mortgage was easy. If you are self employed are a contract worker and you do not receive regular income , it could be almost impossible to get a standard mortgage. However, with a self-cert mortgage you did not have to provide pay slips etc to prove your income.