Who are self-certification mortgages for?
It is not just the self-employed who may find self-certification mortgages useful. Those who work in professions such as teaching or construction which sometimes involve short-term contracts, or those who work on a freelance basis may find it hard to identify their exact earnings. Those paid mainly through commissions, bonuses or other irregular methods may find that self-cert mortgages best suit their needs. Not all self-employed workers will benefit from using the products though and if you have company accounts going back more than three years, you may be better off plumping for a mainstream mortgage as it is likely to carry a lower rate of interest.
Don’t self-certification mortgages have a bad reputation?
The fact that incomes are not stated on applications obviously leaves the system open to abuse if borrowers or brokers do not act within the rules. Remember that deliberately entering false information on a mortgage application is a criminal offence. In 2004, the BBC highlighted some underhand practices in the sector which damaged its reputation for a while, but industry regulator the Financial Services Authority gave self-cert mortgages a clean bill of health after conducting a review.
Fast-track mortgages
Some people get confused about the differences between self-cert mortgages and ‘fast track’ facilities that some lenders offer. The latter allows customers requiring mortgages below 75% loan to value (the percentage of the property’s value you have borrowed) to avoid all of the verification and paperwork involved in processing mainstream mortgages and is nothing to do with self-cert mortgages or products for the self-employed.
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