Self Certification Mortgage Applications Rise

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By Michael Sterios

The attractiveness of self-certification mortgage products is boosting the overall number of home loan applications in the UK. For true self-cert products, the applicant does not need to fully prove their income by way of documentary evidence such as pay slips and tax records. Rather, applicants will make a declaration of income to the lender based on their past earnings and expected future income.

Self-certification mortgage products are growing in popularity as more people receive income in variable patterns and through non-standard forms such as bonuses and commissions. Originally self-cert home loans were designed for the self-employed. The changing composition of the workforces has, however, meant that many employees cannot fully prove their employment income as well.

Not having to fully prove income is believed by some analysts to increase the risk of over borrowing and therefore repossession. However, provided the applicant does not exaggerate their income on their mortgage application, they should only be approved to borrow the maximum amount they can afford to repay in accordance with the lenders’ criteria.


Additionally, lying about income on any home loan application is a criminal offense meaning there are severe consequences if a fraudster is caught by the authorities. These days more and more lenders are challenging applicants’ income declarations, reducing the likelihood of borrowing putting themselves at financial risk and catching criminals in the process.

Interest rates are usually higher on self-certification mortgage products than for standard mortgage products and loan-to-values can also be lower. This means the borrower will have to fund a larger deposit thereby increasing their initial investment in their own home. This is due to the fact that lenders believe self-cert applicants represent a higher risk to them than standard applicants.

This can act as an extra incentive for applicants to not lie about their income and over borrow on their mortgage. If the borrower has their own money at risk because of the larger deposit they were required to contribute they are more likely to not over borrow and increase the risk of repossession. If they are repossessed they will most likely not recover their deposit funds as the property will no doubt be sold at a discount by the lender at auction.

As the composition of the workforce shifts from more people becoming self-employed, self-certification mortgage products should continue to rise in popularity. It is estimated that a quarter of the UK’s population are already self-employed and therefore have trouble proving their income, and this figure is growing. Mortgage lenders have recognised this which is why self-cert home loan products are so widely available on today’s mortgage market. Demand for self-certs should continue into the future and as a result the products should become more competitive.

If you require a self-certification mortgage you should contact an independent mortgage adviser for expert, impartial advice. An independent broker will be able to advise you on the entire home loan market and can utilise software that can help pinpoint the right product to suit your personal situation. Mortgage brokers usually charge a fee, however the payback could be worth it.

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