Are Self-Cert Mortgages Still Available?

Get in touch today to discuss the most suitable mortgage option for you.

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What are self-cert mortgages? 

Self-Cert mortgages, also known as self-certified or self-certification mortgages were available in the UK prior to 2008. They were predominantly used by Self-Employed applicants, as traditional mortgages didn’t allow for applications from those who were unable to provide evidence of a PAYE income.

It was a mortgage product that allowed applicants who were unable to prove their income to self-certify their own income, without any evidence of how that income was earned, or that the amount that they had claimed that they earnt was accurate.

Surprisingly self-cert mortgages were widely available, although the interest rates reflected the increased risk to the lender, so were usually significantly higher than for a standard mortgage application. 

Why aren’t they available?

Self-cert mortgages were removed from the market in 2009 by the Financial Conduct Authority (FCA). This method of lending was discovered to be extremely vulnerable to both unethical lending practices and disingenuous applications, with many borrowers claiming to earn significantly more than they actually did. 

This, of course, led to widespread financial difficulty for both borrowers and the Mortgage Lenders involved, and the practice is thought to have had a substantial influence on the financial crisis of that period.

The FCA drew up a set of rules, known as the ‘Responsible Lending Guidelines’ as a result, which means that Self-Employed mortgage applications now have to be assessed in the same way as traditional mortgage application, with satisfactory evidence of a stable income provided.

Getting a self-cert mortgage overseas 

In parts of Europe, it’s still possible to obtain a Self-Cert mortgage, as the countries offering them are not governed by the Financial Conduct Authority. They highly discourage this practice, however, as borrowers are left vulnerable to financial risk and will not be protected by UK legislation.

Why is it not advisable to obtain a self-cert mortgage?

Taking out a Self-Certified mortgage from overseas means that you are not protected against the same mis-selling practices as UK lenders are, and this also puts you at substantial financial risk.

What are the alternatives?

In current times, Self-Employed borrowers have no need to use this type of mortgage. The vast majority of Mortgage Lenders in the UK now offer all of their mortgage products to both employed and Self-Employed applicants. Self-Employed applicants actually have access to 97% of mortgages on the market.

Whatever your trading style, be that a Sole Trader, Contractor, Limited Company Director or Partner, there are lenders offering options for you, so long as you can prove your income.

These are the types of income typically accepted by mortgage lenders, the type of proof of income required will depend on your trading style and income type:

  • Salary and dividends
  • Net profits (or your share thereof)
  • Income from investments and pensions
  • Income from rental property
  • Freelance income 

Speak to Heritage Mortgages

At Heritage Mortgages, our experienced Mortgage Brokers can help you find a lender who will make the most of your income, no matter your Self-Employed income type. We’ll look at your individual circumstances and explain what type of mortgage will suit you best, and why.

We have access to many mortgage lenders, so will have a competitive deal to match your circumstances, however niche they may be.

Why Heritage Mortgages?