Are Self-Certification Mortgages Still Available?

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What are self-certification mortgages?

Self-certification mortgages, often referred to as self-cert mortgages, were available in the UK prior to 2009 and were often utilised by self-employed applicants or those with a non-traditional income source, who may find it difficult to prove their income.

Self-certification mortgages allowed applicants to declare their own income, without providing evidence to back up their claims. Although the interest rates were substantially higher to reflect the risk in lending without assurance that the borrower could afford the mortgage repayments, as traditional mortgages were only set up for traditionally employed people with a PAYE income, self-employed mortgage applicants had no other option thank to take out a self-cert mortgage.

Are self-cert mortgages still available?

Self-cert mortgages were removed from the market in 2009 by the Financial Conduct Authority. This was a result of the misuse and mis-selling of this type of mortgage, which led to many applicants borrowing substantially more than they could afford to pay back.

The irresponsible lending associated with self-cert mortgages largely contributed to the 2008 financial crisis and resulted in the creation of the ‘Responsible Lending Guidelines’ which puts a duty of responsibility on mortgage lenders to ensure all applicants’ income is evidenced.

Getting a self-cert mortgage overseas 

Some overseas lenders are still offering self-cert mortgages, however, we would highly discourage approaching this type of lender, as they are not authorised and regulated by the Financial Conduct Authority.

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Why is it not advisable to obtain a self-cert mortgage?

The Financial Conduct Authority advise strongly against using non – UK lenders in order to obtain a self-cert mortgage. Borrowers considering this form of product are at substantial risk of miss-selling and financial vulnerability, as they will not be protected by UK rules and regulations.

What are the alternatives?

There are a plethora of options available to today’s self-employed borrowers, making the need for self-certified mortgages redundant. Whatever your trading style, there will be mortgage advisors offering an option for you, providing you can provide proof of income. Given the wide range of  trading types associated with self-employment, taking mortgage advice prior to your application is strongly encouraged, to ensure you approach the most appropriate lender for your income type. Those income types considered are:

  • Personal salary and dividends
  • Share of net profit
  • Pension income
  • Investment income
  • Rental income
  • Freelance income

How can First Thought Financial Services help you?

Here at First Thought Financial Services, we specialise in self-employed mortgages, so whatever your trading style, we can help you to find a competitive deal to suit your needs. Our Mortgage Brokers have access to a broad spectrum of lenders, meaning that we can often secure rates that you won’t be able to find on the high street.

Proving your income when you work in a non-traditional employment type can be more arduous, but we can help you to prepare supporting documentation ahead of your application, to ensure a smooth and efficient application process.

Contact one of our team today to see how we can help you.

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

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