How do self cert mortgages work?

The basic principle of a self cert mortgage is that you do not need to provide actual proof of your income to a lender. With a self cert mortgage you will need to declare your actual income on the lenders mortgage application form but you do not need to show any formal proof of this. However, lenders reserve the right to perhaps ask for bank statements to confirm the declared figure or ask for confirmation from your Accountant.

Who are self cert mortgages for?

Traditionally, self cert mortgages were aimed at the self employed and this still largely remains the case. Self employed people and small business owners will see regular fluctuations in their income and they do not always have the paperwork required to corroborate their earnings. Self certification mortgages can also be suitable for people with more than one source of income; perhaps a second job, investment properties or other business interests.

With no formal proof of income, a self cert mortgage could seem to be an easy way of obtaining a larger mortgage by overstating income to the lender. There are a few problems here. Lying about your income will be classed as fraud and you run the risk of being black listed on a database that is shared between all lenders. In addition, you could end up with a mortgage which is unaffordable and if you are unable to make the repayments then morgage arrears and repossession will follow, damaging your credit file for many years.

Self cert mortgages are still available and for some people they do provide a good solution. Self certification mortgages are not generally available from the high street lenders but a whole of market mortgage broker will certainly be able to source the best self cert mortgage for your needs. As with all mortgages, make sure you can afford the monthly repayments.