Information About Self-Certification Mortgages

A Self-certification mortgage is where the mortgage lender requires no proof of income i.e Bank Statements, Payslips or Accounts for self employed applicants. There can be many reasons for people needing to self-certify their income. These may include; accounts not readily available for the self-employed, did not wish to provide income verification in order to speed up the mortgage process professional mortgages etc.

In the majority of cases the actual income of the applicant may have been scaled down for taxation purposes. Applicants who are Self-employed will probably exploit various tax minimisation methods in order to save on company tax and income tax. Therefore when they do come to attempt to arrange a mortgage they experience many problems, however their genuine earnings may be understated, which is where a self-certification mortgage comes into play…

It is professional mortgages commonly know that many self-employed people do not keep accurate or exact records of their income and as a result may not be able to provide past years of trading accounts to lenders when completing an application for a mortgage deal. For people who aren’t self employed it is hard enough to obtain a full-status mortgage so for someone who is self-employed and hasn’t got up to date or accurate accounts or their accounts show minimal profit it is professional mortgages virtually impossible.

So is the self-certification mortgage good news or bad news?

I feel that the introduction of self-certification of mortgages is definitely good news, especially if you are self-employed. A self-certification is allowing self-employed people to stay on the property market by enabling them to say what they estimate their income will be and not having to prove this. If self-certification mortgages were not professional mortgages around and you were self-employed then I could almost guarantee that you could not get a mortgage, or if you were lucky enough too it would be on a terrible deal at an extremely high rate.

The only disadvantage of a self-certification mortgage is; as applicants are able to say what they anticipate their income will be this means that technically people could declare £250,000 meaning that they could obtain a huge mortgage, and possibly over commit meaning that professional mortgages they could end up missing payments and getting into serious trouble. It is important that if you do decide to go for a self-certification mortgage that you do not inflate your income as this is known as mortgage fraud and if found out can come with serious consequences.

Stephen Hill runs The How To Stop Stammering Centre, he has a number of websites including:

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