Self Cert Mortgage

What is a Self Cert Mortgage (self certify mortgage). How Self Cert mortgages work for you. What to look for to get the best deal for self employed and employees. The trick to maximising LTV

What is a Self-cert Mortgage?
Self Certification solely relates to income quoted on a mortgage application. This means the mortgage lender takes your word for what you say you earn.

BUT, there are different levels of self-cert and lenders use other checks to assist verify the reasonableness of stated income as outlined below in the checks section below.

How they work for you and who’s eligible.
Obviously this varies greatly from lender to lender.
- Both Employed or Self-employed (these loans were originally designed for self-employed as it was more difficult to prove “true” income as it was often minimised for taxation purposes)
- Paid Commission or bonuses
- Earning large % overtime
- Various sources of Income (multiple jobs – including cash in hand)
- No tax returns
- Short term self employed
- Speed of completion.
- Very low Loan to Value (often less than 65% are treated as self-cert)
- Estimated income is greater than past. E.g. buying a buy-to-let property – can count this income.
- Seasonal work
These are just a few of the more common reasons. As always it’s important to way up the benefits and convenience against the increased interest rate but the Self Cert Mortgage Calculator can do this for you (there are lots of different mortgage calculators including Goal, term and True cost amortisation calculators as well)

Limitations of Self Cert Mortgages
- Usually interest rates are loaded (higher) than with proven income
- Limited number of lenders
- LTV (loan to value) is lower as perceived risk is higher. Having said this 85% LTV is common with 90% available with several lenders. You can always move to a second charge mortgage to increase the LTV to 100% ltv mortgage but obviously rates increase further. ( LTV Calculator )

Checks on a Self-Cert Mortgage (most common)
Reasonableness
Is the income reasonable for stated occupation? A window cleaner declaring £130,000 income is unreasonable and would be declined. BUT, noting he has 8 people working for him then the income becomes reasonable. Approved.

Employer/Accountants Reference
Although not looking to verify income, employment/self-employment status is confirmed along with length of self employed.

Tax Letter
Again proof of self-employment would be a letter from Inland Revenue. Not to check income but status

Bank Statements
These are often supplied as proof of mortgage payment but lenders may review them to ensure income stated corresponds with deposits o the account.

True Self-Cert Mortgages
This is the Ultimate in Self Cert Mortgage as absolutely no checks or accountants references are required. Obviously this is reflected in the interest rate and LTV limitations however is ideal for someone just starting out in business for as little as one day. This will also help to reduce business taking using your mortgage.

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