FINANCE SUPER MARKET

A self certified mortgage is a method a declaring income that will be suited to an applicant who may have sources of income that are not easy to prove. It is important to note that a self-certification mortgage is not a type of product; rather it is a method of declaring income.

There are a number of different situations in which a mortgage applicant may not be able to provide full and verifiable proof of their income. This includes applicants who are self-employed, company directors, freelance workers, or workers who receive their income on an irregular basis through commissions and bonuses.

Once in the self-employed bracket, most people don’t return to being employed. A Self-Employed Index was recently introduced which suggests from research that the mood among UK’s business owners is buoyant, with 60% feeling confident about business prospects for the next six months. Another third were said to be very confident about the same period. The number expecting increased turnover for the next twelve months was 47%.

The number of self certified mortgage borrowers is also influenced by people multiple jobs. The rise of house prices, the increase in mortgage rates, creeping inflation are all factors that mean that some workers are now holding two or even three jobs just to make up the income they need. For these people, proof of income can be awkward.

There are a number of others who make up the rest of the self certification marketplace. There are those on low basic salaries, but who earn large bonuses at different times throughout the year; directors who wish to keep their financial affairs private; high net worth individuals with complex income streams, for example, property developers.

Self cert mortgage is for people who are unable verify their income by producing a series of wage slips. For such people income may come from a variety of sources, or it may be that they, as self-employed, have not been trading long enough to have accounts for the required period. Another possibility is that they may have a low basic salary and achieve high income through commission, bonuses, dividends or a second income.

Self cert mortgage covers a wide range of people and the trend is increasing. The self certification mortgage market is currently booming. If you have been self employed for a short period you may find your options are more limited. Because you work for yourself the major lenders see you as a risk, they are worried you will not be able to keep up your repayments if your business slows or even folds.

In many cases the actual income of the applicant may have been minimised for taxation purposes. Self-employed workers, for example, may utilise various tax minimisation techniques in order to save on income tax and company tax. When it comes time to apply for a mortgage their actual earnings may be understated, leading to a situation in which they are able to borrow a smaller amount than they can actually afford.

In addition to this, many self-employed workers do not keep accurate or complete records of income earned and therefore may not be able to supply several years of trading accounts to lenders upon application for a mortgage. This can make it difficult to secure a full-status mortgage from a high-street lender.

If you work for yourself then getting a mortgage can be much more difficult. The reason is that being self employed means your income is not always regular and consistent. This means that banks and building societies are less likely to lend you a mortgage.

There is however a solution and that is to opt for one of the self cert or mortgage self certification that some specialist mortgage brokers can provide you with. Being in the UK this market is tightly regulated so you need to make sure you go to a broker that is not only regulated but can provide a range of self cert mortgages.

A mortgage self certification is designed to help people in situations such as these. The mortgage application is based on affordability and the ability of the applicant to repay the loan, but does not require proof of income. Instead of providing trading accounts, payslips or any other proof of income, the applicant must certify that they have sufficient income to service the repayments when they self-certify their income.

A range of specialist mortgages are available if you are in this situation. These are usually provided by the smaller lenders or partners of larger organisations that understand your situation. They also understand that as well as being a risk, you as a self employed person, can also be a success in your business and therefore should not be denied a mortgage.

Everyone will have their own unique set of circumstances which means there is no single correct solution for providing you with a mortgage. A Specialist mortgage broker will have the experience and access to a broad range of mortgages to find a mortgage for most individuals.