Getting to Know a Self Certification Mortgage

2007-03-08 10:33:40

( Financial )



Self Certification Mortgage or self cert mortgages is when you only have to declare your earnings and the one who issues your mortgage will not ask for any more required accounts or documentation.

That is how a self cert mortgage normally works.

But then sometimes, the loan officer asks for some proof of your income. It is to ensure that you are able to pay for the loan you are making. One example of this 'proof' is an accountant's certificate. This is duly signed by your accountant containing information that will prove that your income will suffice to the requested loan. Another example is bank statements which will help the lender look at the gross income you receive. Most of the time, these are only asked if you are borrowing less that 75% loan to value. It's better if you produce at least two of these documents so you will be able to get a mortgage certification.

But some lenders also allow 85% on a self certification basis.

In a self certification mortgage, you usually pay more because you are covering the lender's risk too. So, normally you pay around 20%-40%. Most of the time, interest rates are higher in a self certification mortgage.

It also has been known that self cert mortgages are for the self-employed. But in fact, it is for everyone. You can avail of a self certified mortgage but you have to make sure that you don't declare yourself a millionaire so you won’t be in danger of going bankrupt or getting sued.

Self Certified Mortgages are usually lent in a multiple of your wage. So banks or lenders usually ask for your wage slips or pay slips (as going for proof of your ability to pay the mortgage).

As mentioned earlier, remember also that most of the time, self cert mortgages can only finance up to 75% of your loan. But this may go up to 25%-90% depending on your income's status and the lending ability of the lender.


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