Are Self-Cert Mortgages Still Available

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Are Self-Cert Mortgages Still Available?

What are self-cert mortgages?

Self-certification mortgages, often known as self-cert mortgages, were UK mortgage products prior to 2009, that allowed borrowers to certify their own income, without providing any evidence that they were earning the amount quoted, or indeed, any income. 

Self-employed applicants and those with non-traditional incomes usually used this type of mortgage, which were subsequently banned, because the majority of Mortgage Lenders were only willing to consider applicants with evidence of traditional PAYE income.

Although interest rates were higher for self-certification mortgage products, being  predominantly Interest-only mortgages meant that monthly repayments were affordable for people in the short term, however, many people were unable to repay the entire loan, resulting in substantial repossessions.

Why aren’t they available?

Self-cert mortgages were banned in the UK in 2009, by the Financial Conduct Authority, following significant reports of mis-sold mortgages and unethical lending practices, as well as the impact that they had on the 2008 financial crisis.

The ‘Responsible Lending Guidelines’ were subsequently developed to hold lenders accountable to make assurances that all applicants’ are able to provide suitable proof of their income.

Getting a self-cert mortgage overseas 

There are Mortgage Lenders in some European countries that still offer self-cert mortgages, however these are not authorised and regulated by the Financial Conduct Authority, so we highly discourage you from considering this form of borrowing.

Why is it not advisable to obtain a self-cert mortgage?

Self-cert mortgages put borrowers at substantial risk of unprofessional and unethical lending practices. You are financially and legally vulnerable when borrowing from abroad, as there will be no Financial Conduct Authority protection available.

What are the alternatives?

The vast majority of UK lenders now offer traditional mortgages to self-employed applicants, so there is no need for products like self-certified mortgages in modern times. No matter what form of self-employed income you have, there are Mortgage Lenders who will accept your trading-style and evidence of income as suitable proof of income for a mortgage application.

The following forms of income are accepted, and whilst not all lenders accept all of these forms, we can help you approach the appropriate lender for you:

  • Personal salary and dividends
  • Share of net profit
  • Pension income
  • Investment income
  • Rental income
  • Freelance income

How can Mortgages by McAteer help you?

Mortgages by McAteer specialise in sourcing competitive self-employed mortgage deals, so whatever form of income you have, we can find a lender who will look favourably on your application. Making recommendations from our access to a broad spectrum of lenders, allows us to secure deals that you are unlikely to find on the high street.

Whilst the application process can look complex to self-employed applicants, our Mortgage Brokers can offer you expert mortgage advice to help you prepare the documentation needed to prove your income in advance, ensuring the process is as smooth and efficient as possible. You can also feel confident that you are adequately protected in your borrowing. For a friendly chat about how we can help you, call us today.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE