Self-Certified Mortgages

Self-certified mortgages are designed to help those who cannot verify their income for any reason. This might include the self-employed, those whose main income is from investments, stocks and shares; those who work irregularly, or on a limited-contract basis; or are reliant on commission. Instead of providing proof of income, you sign a declaration form which confirms that you are able to meet the regular repayments on your mortgage. In some cases, you may be required to provide proof of employment or provide recent bank statements. Your lender will also look at your credit history, to assess how well you have managed credit in the past, and how likely you will be able to keep up with repayments in the future.

The amount you can borrow with a self-certified mortgage is usually less than with a standard mortgage. Typically, you can borrow a maximum of eighty-five percent of the property's value, which means that you still need to pay a relatively large deposit. There are a handful of lenders who will allow you to borrow more than this, but the interest rate will increase accordingly. In any case, interest rates which apply to self-certified mortgages are usually higher than conventional mortgages and as such, these mortgages are usually more expensive.

It is important to correctly calculate how much you can afford; if you fail to make repayments, your mortgage provider may be forced to repossess your home. You may wish to consider an insurance option such as Mortgage Payment Protection Insurance (see MPPI), which would cover repayments if you were unable to pay them due to redundancy or illness which resulted in your being unable to work. Although this would increase the overall cost of your mortgage, it could prevent financial problems later on.