Are Self-Cert Mortgages Still Available?
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Are Self-Cert Mortgages Still Available?
When you’re looking into Self-Employed mortgages, you may hear self-certified mortgages being mentioned. This page explores whether these loans are still available and if they are an easier way for Self-Employed people to buy a home.
What are self-cert mortgages?
With a traditional mortgage, an important part of the application process is to evidence how much you earn each year. But a self-cert mortgage was designed to avoid this: it just required you to state your annual income and sign a form to ‘certify’ the amount.
Self-cert mortgages were aimed at those who found it hard to prove that they had a steady, reliable income. As a result they were popular with the Self-Employed, contractors, freelancers and directors of small businesses. At the time, these types of mortgages often provided the only route for them to buy a home.
Why aren’t self-cert mortgages available now?
Self-cert mortgages were one of many mortgage products removed from the market after the Credit Crunch in 2008. The financial crisis was partly caused by ‘sub prime’ lending – where lenders globally were approving customers for mortgages that they were unable to afford.
The Financial Conduct Authority carried out a major investigation into risky mortgage products and unscrupulous lending and banned many products.
Mortgage lenders now have to ensure that every borrower has enough income to afford the repayments on their loan, by checking their payslips, bank statements and, for Self-Employed people, their business records.
What are the alternatives?
Take a bit of time to explore UK mortgage options. Most lenders will happily take on the Self-Employed – you just need to get a few documents together. There’s a good spread of options on the income they will accept, including:
- Salary and dividends
- Share of net profit
- Rental income
- Investment income
- Pension income
You can make the process simpler and easier by talking to a Mortgage Broker. We’ll make sure you can provide the proof of income a lender needs.
Typically you will need two to three years’ accounts, recent self-assessment income tax forms and bank statements.
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Getting a self-cert mortgage overseas
It is still possible to get a self-certification mortgage from providers outside the UK, where you don’t need to prove your income. The FCA warns against these products because they are a high-risk way to borrow.
Interest rates on these products are likely to be very high, there can be hidden fees and charges and there is no course of recompense if you are treated unfairly.
Always seek professional mortgage advice before taking out an overseas mortgage. It’s not usually too difficult to get a Self-Employed mortgage today and you’re likely to find various UK lenders offering a mortgage deal where you meet their criteria.
How can a Mortgage Broker help?
Here at Mint Mortgages and Protection we’re financial professionals who are dedicated to the mortgage market. We spend time getting to know you, your situation and your property goals, and then compare hundreds of products and lenders to find the most suitable mortgage options.
Some mortgage lenders only sell their products through brokers – and many of these are specialist lenders who offer Self-Employed mortgages, Buy to Let mortgages or bad credit mortgages.
We’re also here to support you throughout the mortgage application and chase up anything that is slowing down your house purchase.
Mint Mortgages and Protection is an Appointed Representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading name of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE