Guide To Self Employed Mortgages

What is a self employed mortgage?
Self employed mortgages are commonly called "self-certification mortgages" or "self-cert mortgages" for short, and refer to a mortgage where the borrower is self-employed or free-lance and has to certify their own income.

Who can use a self-certified mortgage?
Self-certified mortgages can be used by anyone eligible for a standard mortgage, but are commonly used by those who are self employed or have irregular forms of income.

Why use a self-certification mortgage? What are the benefits of self-certification mortgages?
A self-certified mortgage can in some cases be the only way the self-employed can obtain a mortgage because it allows a statement of income, which can be supported in a number of ways, to be used to determine the maximum borrowing amount allowed by the lender.

What are the disadvantages of a self-certification mortgage?
A self-certified mortgage will require additional paperwork compared to a standard mortgage and different mortgage lenders will place varying burdens of proof on the borrower. This proof will have to be supplied for the mortgage request to be successful.

How much do they cost?
A self certified mortgage has exactly the same costs as the majority of other standard mortgage products, so you will still need to shop around to find the best deal.

How do you choose the best self-certification mortgage provider?
The majority of the factors in choosing a mortgage provider remain the same as standard for a self-certification provider.
There are also a number of factors to consider that are specific to self-cert mortgages. These focus on the convenience allowed by the mortgage lender in allowing you to prove your own income, and the burden of proof required. In some cases this can be overly excessive, making it extremely difficult for the majority of applicants to succeed in proving their income, and in some cases too lenient, allowing the possibility of fraud that could undermine the lender.

What’s the best way of proving income?
Outside help is available if there is any uncertainty over how to prove your income. Common choices include consulting personal accounts or an Independent Financial Adviser, both of whom can offer advice that is relevant to both your personal circumstances and finances. There can also be a degree of certainty that they are acting in your best interests, rather than what might get them the highest commission. The methods lenders require to prove income in a self-certification can be discovered by querying them directly. Careful shopping around of different providers is likely to provide a better deal than simply choosing the first provider you come to.

How do you purchase a self-certification mortgage?
A self-certified mortgage will follow the same process as other standard mortgage products, with a few additions. Self-certification will require you to state your income to the mortgage lender. This will require different burdens of proof depending on which lender is used, but typically a variety of forms and records will need to be submitted. Any such submissions are legally required to be accurate and truthful, so take care when filling in the details. Some lenders can insist on receiving up to three years of financial records before accepting the stated income. In some cases putting forward a larger deposit can reduce the level of proof required as it substantially reduces the potential risk to the mortgage company.

Who provides self-certification mortgages?
Self-certification mortgages can be found from a range of banks, building societies and specialist mortgage companies. Products are either provided directly or through a range of intermediaries such as agents or brokers. Many of these different organisations will only offer recommendations based on their own products, with many associated with certain companies or working on commission.
It is also possible to obtain a self-cert mortgage through an Independent Financial Adviser (IFA). Many specialise in the field of self certified mortgages, and are the only advisers legally required to give impartial and unbiased advice with no ties to particular products or companies.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.