Are Self Cert Mortgages Still Available?
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Are Self-Cert mortgages still available?
We’re often asked whether it’s still possible to get self-cert mortgages, which were once the go-to mortgage choice for the Self-Employed.
What are self-cert mortgages?
A self-certification mortgage does not require any proof of income from the applicant. You just sign to certify that you can afford to repay the loan and relevant interest rates. This kind of mortgage is no longer available in the UK.
Why aren’t they available?
These mortgages aren’t available anymore as they are too risky both for lenders and the customer.
The issue is that because there is no need for people to prove their income, there is room for dishonesty or misunderstanding – which could mean that the mortgage customer could lose their home.
Did self-cert mortgages lead to the credit crunch in 2008?
There were various factors that contributed to the credit crunch, and mortgages were certainly part of the issue. The problem was with some lenders offering mortgage products to ‘sub-prime’ customers – who were more likely to fall behind with their payments.
Following the credit crunch, the government created a new financial regulator: the Financial Conduct Authority (FCA). It conducted a major review of the mortgage market, introduced much stricter guidelines around affordability checks and interest only mortgages and banned self-certified mortgage products.
Can I get a self-cert mortgage from overseas?
While it is possible to get a self-cert mortgage from non-UK providers, it’s not advisable. Products from overseas mortgage lenders won’t be authorised and regulated by the Financial Conduct Authority – that means less protection if anything goes wrong.
These types of mortgages may be subject to high fees and interest rates, too. There are much safer, simpler ways to buy a home from UK lenders.
What are the alternatives?
The reason that people once sought out self-cert mortgages is that was previously much more difficult for Self-Employed people to get a mortgage deal. These days, Self-Employed mortgages are much more commonplace – the main high street lenders all welcome customers who run their own businesses.
Put simply, there is no need to seek out a self-cert mortgage, because a traditional mortgage will almost certainly be available to you.
Just talk to a Mortgage Broker like The Mortgage Centre and we will seek out the most appropriate UK mortgage deal for you. Lenders accept all kinds of income for a Self-Employed mortgage, whether it be salary and dividends, share of net profit, investment income, rental income or pension income.
To explore the options, just speak to one of our Mortgage Advisors today. We’ll compare lots of deals and lenders, and support you with the mortgage application and beyond.
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