These are typically for the self employed or those with non standard employment eg contractors or those with multiple jobs or those whose income consists largely of bonuses or commission etc. where proving income can be difficult.
Self certification mortgages are available with variable, fixed, capped or tracker rates, please speak to a mortgage adviser for more information.
Specialist mortgage lenders are also able to help those with a bad credit history for example, county court judgements (ccj), mortgage arrears, ex-bankrupts and those with IVA.
Please click here to read about the different types of mortgages available.
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A self certification mortgage, sometimes referred to as a non status mortgage is useful for people that find it difficult to prove their income. This includes the self employed, or those with a high amount of variable income, for example those whose salary includes bonuses and/or commission etc. The principle behind this type of mortgage is that you are able to self certify your income, and therefore the amount that you are able to pay back each month. Given that over 3 million people in the UK fall into this category, the market is quite competitive.
Non status mortgages have become increasingly popular in recent years, especially given the rise in the housing market. However, you should always remember that you will be asked your income on the application, even if you aren’t actually asked to prove it. You should only put down your actual income, to do anything else would not only be fraudulent, but could also mean that you are unable to afford your mortgage repayments, especially if mortgage rates rise in the future.
There are still some lenders who will need you to prove your income in other ways, such as an accountant's certificate. This is a document signed by your accountant to say that your income is sufficient to service the loan requested. You may also be asked to produce your business bank statements for a set period so the lender can look at the gross income you have received. before deciding whether to offer you a self certification mortgage.
Nearly all lenders will ask to see 6 months of your personal bank statements and may supplement this information with credit searches to gauge your credit score. If you are a home owner, you will be asked to supply your existing mortgage statements, and if you are renting the lender will ask for a reference from your landlord before granting the self certification mortgage.
Lender’s generally apply the standard Financial Services Authority‘s recommendations on the amount that you can borrow with this type of mortgage, namely 3 times a single salary or 2.5 times a joint salary. The lender’s security in the case of a self certification mortgage comes from the fact that they generally offer a lower loan to value than an 'ordinary' borrower would get – it is unlikely that you could borrow more than 85 - 90% of the property’s value on this type of mortgage. The 10 – 15 % equity means that it's often easier to get a non status mortgage if you have an adverse credit history. Interest rates vary depending on your circumstances but bear in mind that generally, as per “ordinary” lending, the lower the loan to value, the lower the interest rate.
The rates for a self certification mortgage are slightly higher than mortgages offered to employed people due to the extra risk faced by the lender that you are unable to repay the mortgage because your income is not guaranteed each month. To give you some ideas, whilst not being the only products available, current account mortgages are a good example of this.