Are Self-Cert Mortgages Still Available?

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Are Self-Cert Mortgages Still Available?

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Are Self-Cert Mortgages Still Available?

A few years ago, some Self-Employed people would buy a home with a self-cert mortgage. How did these mortgages work, and are they still available in the UK today?

What are self-cert mortgages?

With a self-certification mortgage a borrower simply stated their income and confirmed that they could repay the loan. A self-cert mortgage did not require any proof of income – which is why they were once popular with Self-Employed people with fluctuating income. At the time, this type of mortgage product was often the only option for Self-Employed people to buy a home.

Why aren’t they available now?

The financial crisis in 2007-2008 was largely the result of risky mortgage lending, where banks were taking on customers without fully assessing whether they were able to repay their mortgage debt. 

Following the subsequent credit crunch, the Financial Conduct Authority (FCA) made a major review of the mortgage market. This involved bringing in new regulation to eliminate substandard practice and make lenders responsible for assessing affordability. 

Self-cert mortgages were one of many products removed from the market as part of the review. Now, mortgage lenders have to ensure that all borrowers prove their income as part of the application process.

Can I get a self-cert mortgage from overseas 

Some overseas lenders do offer loans to UK residents that don’t require any proof of income – but the Financial Conduct Authority (FCA) formally warns against these products. 

Taking out an overseas self-certified mortgage is a risky way to borrow money. You could find that interest rates are very high – or they rise unexpectedly – and they have hidden fees and charges. Also, taking out an unregulated mortgage product like this means you have no protection; there’s no regulator to complain to.

We do not recommend you resort to an overseas mortgage. Speak to a professional Mortgage Adviser in the UK. Traditional mortgages are now more flexible than ever.

What are the alternatives?

Some Self-Employed people feel that it is complicated to get a mortgage – but it is usually no problem. As long as you have accounts and tax records from the past year or two it is generally straightforward to find a mortgage deal. 

Self-Employed mortgages today will accept all different forms of income, depending on the lender, including:

  • Salary and dividends
  • Share of net profit
  • Investment income
  • Rental income
  • Pension income

How can a Mortgage Broker help?

Mortgage Brokers like Easy Street are here to make it easier and stress-free to find a mortgage to suit you. We compare hundreds of products across dozens of lenders, looking at the criteria, rates and fees to recommend the most suitable options.

Plus, we support you with much more than mortgage advice. We help you throughout the mortgage application and are there to help every step of the way, right up until you collect the keys to your new home. 

Easy Street Financial Services Limited is an appointed representative of HL Partnership Limited, authorised and regulated by the Financial Conduct Authority. Easy Street Financial Services Limited is a company registered in England and Wales. 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON YOUR MORTGAGE

What Does A Mortgage Broker Do?

Ian Symmonds, Director of Easy Street and Financial Adviser, talks us through the role of a mortgage broker on the Mortgage & Protection Podcast.

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