Self Certification Mortgages

A self-certification (self-cert) mortgage was designed for mortgage applicants who were unable to or were having difficulty in proving their level of income. The reason for being unable to prove income could be for several reasons including:

1. Annual accounts not up to date.
2. Income received from various sources.
3. Income from abroad.
4. Non-traditional income e.g. payment by other methods including benefits in kind or produce.
5. Non-earned income e.g. investment income.
6. Rental income.

What many lenders advocate is that if the potential applicant is unable to prove the income then they will allow the person to self-certify their income. Basically this means that the lender will usually accept whatever level of income is confirmed to them without actually checking the amount. Although the lender would not normally check the actual amount, they will make further enquiries on occasions e.g.

They may phone the accountant or employer to confirm other details such as:

1. Length of service.
2. Permanent nature of job.
3. Confirmation of self-employment.

The lender will also carry out their own income adequacy check in that they will have tables showing average incomes for various occupations and will obviously query an income figure if it is far in excess of the norm for a given job.

Unfortunately the self-cert mortgage market has been open to abuse, it is not available to simply allow applicants not earning sufficient income to fraudulently self-certify a higher level of salary to obtain a higher level of mortgage.

Interest rates and fees are often higher for this type of mortgage than the standard mortgage due to the additional level of risk that the lender is facing.

 

Your home may be repossessed if you do not keep up repayments on your mortgage.