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A self cert mortgage is one where the lender does not ask to see evidence of income before agreeing the loan. [Self-cert loans are also available to those looking to raise additional finance on their home]. In light of the ‘credit crunch’ many people (without thinking) might deem self-cert mortgages to be dangerous and irresponsible lending. That's not necessarily true and to self-certify a mortgage is often the only legitmate way for many to buy or re-mortgage their home. There are many instances where self-cert mortgages are not simply ‘an’ option – they are the only option. Classic examples are people who have recently become self-employed or have just set up a new company and do yet have sufficient accounts. Other examples include people with multiple income sources or who have a combination of employed and self-employed income. In all instances, meeting 'mainstream' or 'status' lending criteria is not going to happen and not a good reason to deny people the finance for a home. Without access to a self-cert mortgage you may have to wait years before buying a property. You may already have a mortgage and have decided to set-up on your own company. When your current mortgage ends what do you do? Either self-certify or consider letting the lender put you on their standard variable rate (the go-to rate) which can be more expensive and unpredictable. Self cert is an abbreviation for self-certification as you are certifying that your income is sufficient to make the monthly mortgage payments. The lender largely accepts your word and, consequentally, many lenders deem self-certification mortgages to be a higher risk loan. It isn't unheard of for individuals and indeed mortgage brokers to falsify income details for self-cert mortgage applications - borrowing more money than is affordable. Other frequently used terms are self-employed mortgages, non-status and (wrongly) no income mortgages. A second mortgage is essentially additional, secured borrowing on your home and may also be self-certified. |
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