Self Cert Mortgages

You will find that there are many different mortgages for individuals in the UK who are looking to purchase their own home.  In amongst the several different mortgages is one called a self cert mortgage.  The self cert mortgages offer you a way to get a mortgage even if you are self employed.  Let’s look further at this option to discuss how it works.

First for anyone that is self employed obtaining a mortgage is very difficult.  You will find the reason that mortgages can be difficult for self employed individuals is the lack of proof for income.  The lenders for any mortgage not just a self cert mortgage are going to ask that you show proof of income so that they may establish your risk.  Risk for a mortgage is determined by the amount of debt you have as well as the amount of income you show.  With self employed individuals the only way to show that there is any income is with tax records.  However, this is not usually good enough with the regular mortgage because a self employed individual will have a variable income for most years.  While most self employed do try to gain more income in a year than in previous years they are dependent on the economy. 

With the many issues surrounding regular mortgages there was a need to establish some other type of mortgage for those that are self employed.  This is where the self cert mortgages come in.  You will find that the self cert mortgages where created to help those that are self employed find the funding they needed in order to gain a home.  With self cert mortgages you are going to find that the bank is willing to loan you the money you need.  There are conditions of self cert mortgages that you must follow though.  Since you are self employed you are going to be seen as a risk.  This means the self cert mortgage is going to have a higher interest rate, and therefore a higher monthly payment from the lender. 

If you can establish that you have a great deal of savings towards a self cert mortgage you may be able to get the interest rate and monthly payment lowered.  Many of us try for a self cert mortgage for a variety of reasons including the fact that we can’t get the home without some type of mortgage.  The self cert mortgages are also going to work a little differently than regular mortgages.  For instance with a self cert mortgage you are unable to get one unless you offer a deposit.  The risk as seen by the bank is too great for a 100% of the loan to value to be issued to anyone that needs a self cert mortgage.  This means that any self employed individual will have to offer at least a 20% deposit towards the buying price as well as a deposit towards the mortgage.  Most companies ask that there be an escrow account in which you pay a little towards the mortgage each month in case there is a default.