If you are self employed with no proof of income and looking for a mortgage, then it is just possible that a self cert mortgage is just what you are looking for. Unfortunately as this type of mortgage has all but disappeared from the scene you may be in for a rough ride, so to speak.
Just a few years ago this was the life-line of the self employed worker whose income was difficult if not impossible to prove through no fault of their own. This is now no longer the case and a self certification mortgage looks pretty much like being a thing of the past.
What is a self cert mortgage? This was a mortgage type set up specifically for self employed business people who although had a very good business with a steady income, had trouble going down the normal route of applying for a mortgage as they could not in fact give proof, acceptable to the lenders, of their income.
Unfortunately this system has been substantially abused over the years and has led to the untimely end of this very welcome mortgage facility. I say the end, however there are some lenders out there who although may not promote the self cert, nevertheless allow borrowing in a similar way as long as you are prepared to convince them your earnings are as you say. A self cert in all but name.
Loan to value levels? As you may imagine, if such a mortgage or loan is available the loan to value is quite high. In other words it is quite typical for a lender only to offer 30-40% of the total property value. This is just a reflection on the risk they feel they are taking on lending to an individual who cannot prove their earnings.
High interest? It is typical again for interest rates to be on the high side-again reflecting the risk that a lender is taking and it is not unusual to be paying 5-6% above the base rate for this mortgage type. It is usual also for bank set-up fees to be relatively high, especially if they feel they are being too generous with the interest rates!
It is worth checking the small print. Never be lured into accepting any deal just because you may never get another offer. This where the advice of a good reputable mortgage advisor or financial advisor should definitely be sought.
Summary: Yes, the lending criteria may be high and the interest not exactly what you would like, along with the loan set-up fees. Nonetheless if you are self employed and cannot prove your income through stamped accounts then a self cert mortgage or similar may be your only recourse when it comes to attaining a home loan.
By John Hester