Self Certification Mortgage

Self Certification Mortgages are a fairly new product on the UK mortgage market. Traditionally lenders have tended to approve mortgage applications on the basis of long-term and regular income, usually with at least three years of payslips. If you run your own business then you may be able to show three years of accounts.

Although this still applies to most lenders criteria; there are now self certification mortgage products available for both employed and self employed individuals who may have irregular income, or income from different sources who do not qualify for the conventional ‘Status mortgage’.

A Self certification mortgage is generally available for people whose income is difficult to assess using the traditional methods. They allow you to declare your income without accounts to back them up.

You may wish to consider a self certification mortgage if you:

- Are self employed
- Receive a large amount of your income through overtime and commissions
- Work part time or irregular hours
- Have numerous sources of income
- Work on a contractual basis

The Self Cert mortgage represents a higher risk for lenders so interest rates will tend to be higher than conventional mortgages. This additional rate is sometimes known as a loading. This loading is usually 0.5% to 1.5% higher than for status mortgage applications.

As with other standard mortgages, self cert products offer fixed or variable rates and flexibility.

As is the case for many newly self employed individuals; it can often be very difficult to prove income. This may not be the case a few years down the line and subsequently means that if and when circumstances change and income can be proven, it would be easy to move to a mainstream product.