Why self-certification mortgages can be a good option for the self employed.
Self-certification mortgages are available for clients who cannot verify their income. This may be because the income comes from a number of sources, or they may have a low basic salary but achieve bonus or commission payments or a regular second income. Typically the self-employed may be unable to prove their income by way of certified accounts or they may not have been trading for long enough to have the required number of years accounts.
Consequently, some lenders provide mortgage finance on a self-certification or non-status basis. Self-certification means that the earnings figure declared on the application form is accepted by the lender without proof. Non-status means that the loan applicant does not provide earnings information at all. Credit checks will be conducted and previous lenders' references may be sought in both cases.
It should be remembered that it is a criminal offense to lie about your income.
Advantages
- A mortgage can be obtained when it would otherwise not be offered.
- Higher lending than possible under normal income multiples.
- Quicker offer of advance, as not so many checks to make.
Disadvantages
- This is a risky area of lending. Such loans are therefore characterised by higher rates of interest.
- The loan-to-value ratios are usually lower than types of mortgage. i.e. larger deposits are required.
NB This information is provided to give you an overview of the different types of mortgages available. It is not comprehensive and you should not base your mortgage decision on the information found here. We recommend you seek professional advice in order to determine the most suitable mortgage for you.
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