What is Self Cert? | Who Qualifies for self cert | self-employed | Non-status | Self Certifying a mortgage | Self Cert Rates
Mortgages & Loans Self Cert Mortgages - True Self Cert mortgages, no proof of income, self-employed and fully employed.
A Self Certified Mortgage (non-status mortgage) was created for people who need to self certify their own financial circumstances to a lender to get a mortgage. The problem before self certification mortgages was assessing your proof of income*, you may appear to your self financially sound and able to afford payments, but you are unable to get a mortgage certificate.
This could be because you are:-
- Self-employed.
- On a short term contracts.
- On part-time contracts.
- Commission based income, your earnings may be assessed frequently by your employer.
- Receiving seasonal wages or earnings.
- Receiving more than one source of income (maybe from a partner).
*3 Years of accounts from a certified accountant are needed for a successful mortgage application with most banks and lenders.
A self certification mortgage is tailor made for those individuals eg self employed who have difficulties making financial assessments sound viable to a lender.
So in essence a non status self certified mortgage enables you to give a self assessment of your income and provide no income references from your employer or your accountant.
The high street banks and building societies have caught on to this and are now providing Self Certified mortgages.
Self Cert is part of the "problem mortgage" market as is adverse credit. read more about problem mortgages.
Self build mortgages are not the same as Self Cert Mortgages, also Self assessment mortgages have nothing to do with the Inland revenue self assessment (self assessment tax). Self build mortgages are available but differ from self cert.
Loan Scandal : Buyers offered mortgages up to 10 times their salaries
It seems that desperate home hunters are being scammed by unscrupulous mortgage brokers who are pushing high interest mortgages where no proof of income is needed. Thousands of buyers are being encouraged to borrow much more than they can afford through the "self-certified mortgage" some borrowing up to 10 times their own salaries or wages.
Self-Certification was introduced as a new mortgage option around 20 years ago mainly for the self employed who's income would vary. The self-cert mortgage application rate has grown by 27% over the last 4 years.
It looks increasingly likely that the most recent self-certified mortgages are going to turn into repossessions as a result of fly-by-night mortgage brokers, because if interest rates raise too much or the housing market falls or even collapses, high interest mortgage owners will suffer the most, while obviously if you exaggerate your income to borrow more than you can afford you are asking for trouble, however it is only human nature to get more than you need, it is clear borrowers should be protected from brokers who make money out of advising these people. Even people with CCJ's are getting mortgages.
Self certified mortgages do actually require borrowers to put a deposit of 15-20% of the mortgage value up front which you would think would deter some people and of course interest rates are significantly higher. A number of applicants do not have to provide any statements of income, but the lenders does require the borrower to undertake an "affordability test" to satisfy that they will be able to afford the repayments, while the FSA (financial Services Authority) did not accuse any lender or broker of fraud they did point out serious failings in the affordability checks that were carried out. The council of mortgage lenders says it has improved anti-fraud systems since the FSA statement was released, so borrowers will be refused a mortgage if they do not pass stringent anti-fraud controls.