What is a Self-Certification Mortgage? - Answering Service Resources

Home
>
Mortgage Refinance
>
What is a Self-Certification Mortgage?

What is a Self-Certification Mortgage?

A Self-Certification mortgage is a mortgage designed for people who are unable to provide proof of income. This type of mortgage was originally designed for the self employed who historically experienced difficulty obtaining a loan with 'high street' lenders due to not having audited accounts available.

If you are unable to show your earnings due to being self-employed, a seasonal wage earner, or anyone with irregular earnings such as a contract worker or commission-based employee, or in salaried employment with a supplementary source of income, an unsalaried company director, or varying other reasons - a Self-Certification mortgage could be the best option for you.

Self-certification mortgages allow borrowers to certify their own earnings without having to supply documentation, such as payslips. With a self-certification mortgage you declare what your income is but generally you do not need to provide any proof. You can apply if you are employed or self employed.

Self-Certification mortgages have also found favour with salespeople and other workers who receive a high proportion of their income as commission or bonus. Even though you may have achieved high earnings this way for years, commission or bonus may still not be considered in calculations by high street lenders.

Self-certification can also be suitable for professionals who often start on a low salary, but whose incomes can rise rapidly.

Self-certification mortgages are suitable for applicants whose income is not easily verifiable, like the self-employed or those that receive commissions. If you're self-employed, a contractor, have irregular income or multiple jobs, you are probably one of many who know you can afford a mortgage but have difficulty proving your income.

Self-certification mortgages are also quite good for people just starting out in a new career with good steady income and a fair amount of deposit behind them.

Self-certification mortgages are ideal for self employed people who perhaps have not been in business for the required three years or cannot produce accounts for a three year period but can demonstrate usually through an accountant's reference that they can meet the mortgage payments.

When applying for a self-certification mortgage you will be required to state your expected annual earnings. The mortgage will be offered on the basis of your likely income rather than you having to provide any documentary evidence.

Self-certification mortgages used to require a higher deposit of up to 25%, but now some lenders can offer up to 90% loan to value. Self-Certification mortgage lenders will usually lend up to three and a half times declared income or two and three quarter times joint income. However, with a deposit of 25% or more a Self-Certification mortgage can usually offer up to five times your declared earnings.

Self-Certification mortgages carry a higher rate than standard mortgages because statistics show most businesses fail within the first two years of trading. So if you were to be left with heavy debt there is a possibility you could lose your home. However, some self-certification mortgages are better than others, and, if cash flow is a problem, it's worth checking out those that offer payment holidays and the facility to pay more when you can.

Fortunately there are a number of competitive self-certification mortgage products available, depending on your circumstances and individual requirements. Self-Certification mortgages are now supported by an ever increasing number of mortgage lenders, including mainstream as well as specialist lenders. Interest rates charged are now far more attractive.

Self-Certification mortgages have become increasingly popular in recent years. However, you should always remember that you will be asked your income on the application. Just because you are in a self certification situation, you should only put down your actual income. To do anything else would not only be fraud, but could also mean that you are unable to afford your mortgage repayments, especially if mortgage rates rise in the future.

You may freely reprint this article provided the author's biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

In The News:

BBC News
US races to ease mortgage meltdown, passing aid bill
Detroit Free Press, United States - 11 hours ago
An expansion of federal housing assistance that is projected to keep 400000 families nationwide from losing their homes by enabling them to refinance their ...
Video: House OKs Rescue for Homeowners, Freddie, Fannie AssociatedPress
House OKs measure to help repair housing ills TheDay
Predicted bailout boosts Regions, Wachovia stocks Trading Markets (press release)
RedOrbit - Chicago Tribuneall 3,542 news articles

The Consumerist
How housing rescue bill can help you
CNNMoney.com - 17 hours ago
To do that, they'll pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance. Plus, they'll agree to pay the FHA 100% of any ...
Inside Wall Street: That Ticking Sound You Hear Out in the ... Money Morning
Imminent housing bill full of hope but few answers Chicago Tribune
Loan program may help borrowers in trouble San Francisco Chronicle
Kiplinger.com - Asbury Park Pressall 60 news articles

US Mortgage Applications Index Fell 6.2% Last Week (Update1)
Bloomberg - Jul 23, 2008
The Mortgage Bankers Association's index of applications to buy a home or refinance a loan fell to 489.6 in the week ended July 18 from 522.2 the prior week ...

TopNews
House Approves Sweeping Effort to Help Housing
New York Times, United States - 3 hours ago
The White House, citing an urgent need to restore market confidence in the two mortgage giants, Fannie Mae and Freddie Mac, said President Bush would sign ...
US Senate to Take Up Fannie-Freddie Bill After House Approval Bloomberg
House Vote on Key Housing Legislation Imminent Originator Times
Bush lifts threat of veto, endorses mortgage rescue Washington Times
Sky News - Smartmoney.comall 269 news articles

China Daily
House approves mortgage rescue
Columbus Dispatch, OH - 3 hours ago
Homeowners sliding toward foreclosure will find it easier to refinance their loans. Regulators will get tougher rules to end bad lending practices. ...
House, Bush get behind housing bill TheNewsTribune.com
House approves mortgage rescue Philadelphia Inquirer
Mortgage Bill Vote WKRC TV Cincinnati
Bloomberg - guardian.co.ukall 1,264 news articles

Mortgage applications decline 6.2 percent
BusinessWeek - Jul 23, 2008
Refinance application volume declined 5.6 percent, while purchase volume fell 6.7 percent, on an adjusted basis. Refinance applications accounted for 39.4 ...

The Money Times
US House approves housing market rescue bill
Reuters - 20 hours ago
N: Quote, Profile, Research), set up a new regulator for the two mortgage giants, and create a fund to help thousands of distressed homeowners refinance ...
US mortgage firm bailout could cost $33b Stuff.co.nz
Fannie, Freddie rescue estimate mounts Economic Times
all 450 news articles

HOUSING BILL WONKERY.
Tapped, DC - 4 hours ago
…[t]he bill also offers consumer-friendly fixed rate mortgage refinancing options, to replace the high cost mortgages often with springing interest rates, ...

Mortgage Application Demand Drops as Loan Rates Jump
FOXBusiness - 23 hours ago
... index dropped 6.2% in the week ending July 18 to 489.6, with a 6.59% 30-year mortgage rate depressing applications for purchases and refinancing. ...

California's Mortgage Bankers Applauds Passage of Congressional ...
MarketWatch - 19 hours ago
The California Mortgage Bankers Association is the leading statewide organization representing the residential and commercial real estate finance industry.

mortgage refinance - Google News

Answering Service ResourceAnswering Service Resource