Self-Certification Mortgages

If you are unable to prove your income, then a self certified mortgage could be the answer. This type of mortgage is particularly useful for freelancers and the self-employed as their earnings may be irregular and so do not meet normal lending criteria. The traditional route these groups of people to arrange a mortgage was to present three years of trading accounts. However, this can be difficult in many cases, and even if these accounts are available, they may be written in such as way as to minimise tax and thus show a smaller income figure.

A self certified mortgage allows you to declare your own income on the application without having to provide the evidence that is usually required when applying for a mortgage. However, even without providing accounts you may be asked to have an accountant back up your statement. The lender will also carry out a credit check and credit score. In some cases, they may request a lender reference or landlord's reference.

The amount you can borrow is based on you and your partner's annual income, along with any bonuses, commission, second income, pension and so on. Self-certification mortgages almost always require a higher deposit: a loan-to value of 75% is usual, although in some cases, lenders will lend up to 90% of the property's value. The good news is that because you are putting down a sizeable deposit, your word will be taken rather than having a lender examine your financial life in detail.

As a self certification mortgage poses a higher risk to lenders, this is reflected in the interest rate you will be expected to pay. Although this will be slightly higher than normal, rates are still generally competitive. The larger the deposit you can put down, the better rate you will pay.