SELF-CERTIFICATION (Where salary slips or accounts may not be required)

YOUR QUESTIONS ANSWERED  (or at least, some of them!)

What does Self-Certification mean? – is it the same as “Non Status”?

Self Certification (“true self cert”) is a term given to a type of mortgage application where the lender accepts the income stated on the application form without carrying out any further checks. Whilst the term is often used, there is no such thing as a “non status” mortgage. For example, every lender will carry out  credit, address and identity checks at the very least. Some will want to check other things as well – such as getting confirmation of where you work, what your job title is etc.

How does a “true self cert” work ?

During the course of completing a Mortgage Application Form, the applicant is required to enter an income figure. It is this amount that the lender will base their affordability calculations on. It is normal for the applicant to be required to sign a declaration stating that the figure they have stated is a fair reflection of their income.

Are there any subsequent income checks ?

On a True Self certification mortgage there are normally NO income checks. However, should a lender feel that the income stated exceeds what they would expect to see for any particular job they may query and seek further clarification. Some other self cert schemes are subject to random checks or are only offered up to a certain level of LTV (say 75% or 85%) Others may require an accountant’s certificate (to show that you are self employed, are trading and your tax affairs are up to date – but they would not ask for proven figures.

Can anyone have a Self Certification Mortgage ?

This depends partly on the Underwriting Criteria of the lender and the income & “status” of the borrower. Some lenders restrict Self Certification to the self-employed only whilst other lenders may restrict them to existing homeowners.

Why Self-Certify a mortgage ?

For some people it is difficult to prove current income levels. Self employed people who have not been trading for long may not have any accounts drawn up until they are needed by HMR&C (The old “Inland Revenue) Long term self employed may only have out of date figures to hand. Some employees may have a large proportion of their income paid as commission, or as income from investments, which some lenders will not take into account or will only take account of part of that sum. Others may have several sources of income. It should be made clear that Self Certification is to assist people who have difficulty proving their income and not those who wish to inflate their income figure in order to secure a mortgage higher than they would normally be able to obtain.

Is a Self-Certification Mortgage more expensive ?

Historically a Self-Certification Mortgage was a lot more expensive and this is still the case with some lenders. Some however, only charge a little more than “Full Status” mortgages now. As there are no income checks the perceived risk to the lender is greater, hence the higher pricing. That aside - at Accelerated Mortgages we have access to various sourcing systems and will always seek to find the cheapest solution to best suit your requirements and circumstances.

By working out the monthly cost for your mortgage, comparing it with what you have been able to afford in the past, and discussing “the affordability” of the mortgage, we can assist you get the mortgage YOU WANT and help you to confirm that you can afford it

© Peter Willingham 2007

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