What are self-cert mortgages?
Self-Cert or Self-Certified mortgages were mortgage products that were used by people who could not prove their income. It was a way to obtain a mortgage without having to show that you can afford the repayments, the lenders essentially take you at your word. Lenders offering this type of mortgage would typically charge you higher interest rates due to the risk involved with allowing a traditional mortgage without proof of income.
They used to be popular among those who were Self-Employed and could afford to take out a mortgage but did not want to go through the hassle of proving their income. They are however no longer available as they did cause a number of problems in the mortgage market.
Why were self-cert mortgages banned in the UK?
Self-cert mortgages are no longer available as they were what was called ‘liar loans’, a lot of people said they could afford the loan even though they could not which would lead to the property being repossessed. They were not authorised and regulated by the Financial Conduct Authority (FCA).
The self-certified UK mortgage was banned in 2009. Self-certified interest only mortgages were also banned. It led to a number of unaffordable mortgages appearing on the market charging high fees and this needed to be clamped down upon.
It is important for lenders to make you undergo an affordability check for the both of you involved in the agreement. If you cannot keep up with repayments on your mortgage then your home is likely to be repossessed.
Can you get a self-certified mortgage overseas?
You can get a self-certified mortgage overseas however there is a lot more risk involved. Obviously the fees are going to be higher but there is less protection if you are given incorrect advice. It is better to speak to a Mortgage Adviser if you have a complex income as they will be able to help you and point you to the right lenders who are perhaps more flexible.
What are the alternatives to self-certified mortgages?
If you are looking for a mortgage and you are Self-Employed there are a lot more lenders more open to accepting Self-Employed mortgage applications. There are more flexible Mortgage Lenders out there and more deals than the ones UK lenders can offer from just the high street.
How can a Mortgage Broker at Purely Financial help me?
If you are confused about mortgages or are not sure on which option is right for you it is best to get in touch with an expert Mortgage Adviser. Although there are no longer self-certification mortgages there are flexible Mortgage Lenders. It can be complex trying to prove your income but we can help you gather all the documents needed with your mortgage application as well as giving you tailored mortgage advice after listening to your specific situation.
Get in touch with a mortgage expert at Purely Financial today to start your mortgage journey and leave the stress to us.