UK Self Certification as an Alternative Type of Mortgage

2007-03-08 10:33:40

( Financial )



What is UK Self Certification?

Also called self certification mortgage or self cert, this is an increasingly popular practice in the UK for people who need a loan. You still apply with a lender and give personal information, and the lender will review your credit history just as in any other mortgage.

But there are some marked differences, too. For UK self certification, you don't need to ask your employer to certify your income, nor do you need to submit proofs of all your income sources. And instead of using physical assets such as your home as collateral, you put up a sizable deposit to cover part of your self certified mortgage. In effect, you self certify your income, and the lender takes your word for it.

Who Needs UK Self Certification?

You may be interested in self certified mortgage if you're self-employed or if you find difficulty in accounting for all of your sources of income. You may be earning income from companies based overseas. Or you may be receiving income from indirect sources, such as when you are a secondary contractor in a project.

For these and any other reasons where you may find it tedious or almost impossible to declare the exact value of your income, you might want to opt for self certification.

UK self certification mortgage is also ideal if you wish to borrow much more than what you can with a conventional mortgage. You simply sign a certification that you can afford to pay the loan charges.

What Else to Consider in UK Self Certification

Since the lender has ways to access your personal credit history and other confidential data, approval of self certified mortgages can take from a few minutes to several weeks.

You need to realize that the lender does require a sizeable amount of deposit for your self certified mortgage. Deposits can range from 15-25% of loan amount, though some creditors may charge more.

The interest rate, as well as other fees, may also be considerably higher than conventional mortgages.

Because your lender takes your word for your ability to pay, you should also exercise some degree of restraint and prevent yourself from over-borrowing. Self certification involves honesty and plenty of responsibility on your part.


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