Are Self-Cert Mortgages Still Available?

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Are Self-Cert Mortgages Still Available?

What are Self-Cert mortgages?

Previously available in the UK, Self-Cert mortgages allowed mortgage applicants to certify their own income amount without providing proof of said income. This was helpful to those who were unable to prove income from a traditional PAYE job, as they didn’t have access to standard mortgage products at the time.

Known throughout the media as ‘liar loans’, self-certified mortgages had high interest rates to mitigate the risk to the lender. This led to a substantial amount of repossessions, given that borrowers frequently overstretched their affordability.

Why aren’t they available?

The Financial Conduct Authority banned Self-cert mortgages in the UK in 2009. This was in response to extensive reports of unprofessional lending practices and the significant role that this form of borrowing played in the 2008 financial crisis.

They subsequently developed the ‘Responsible Lending Guidelines’, meaning that since 2009, lenders are accountable for establishing suitable proof of income from all borrowers, regardless of their employment type.

Getting a Self-Cert mortgage overseas

In some European countries, a handful of Mortgage Lenders still offer Self-Cert mortgages. It’s strongly recommended that you don’t consider this form of borrowing, which is not authorised and regulated by the Financial Conduct Authority.

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Why is it not advisable to obtain a Self-Cert mortgage?

Much like the previous UK mortgage products, foreign self-certification mortgages put borrowers at serious financial risk. You will not be protected by UK laws and regulations when using this form of mortgage product, so there’s a likelihood that you may be a victim of unethical lending practices.

What are the alternatives?

There is really no need for risky mortgage products, the vast majority of UK lenders offer their traditional mortgage products to all applicants. A wide range of Self-Employed trading-styles are accepted in support of your application, so long as you can provide adequate evidence of your earnings.

Whilst not all lenders accept all income types, if you are able to prove any of the following income streams, we should be able to source a lender that will welcome your mortgage application:

  • Salary and dividends
  • Net profit shares
  • Investment income
  • Pension income
  • Rental income
  • Freelance income

How can Mortgage Co help you?

Here at Mortgage Co, we specialise in finding competitive deals for self-employed applicants, no matter what form of income you have. After a quick assessment of your circumstances we’ll be able to recommend those lenders who will make the most of your particular type of income and whom you’re unlikely to find on the high street.

Self-Employed mortgages can be slightly more complex, however, we can help you prepare your proof of income in advance given our comprehensive knowledge of lender criteria. This will ensure the application process is completed as smoothly and efficiently as possible.