Who needs Self-Certification Mortgages?
Author: Andy Bedford » Publish Date: 2 July 2009
There have been muted announcements from the FSA that indicate they may ban fast-track and self-certification mortgages for people in full-time employment; there still seems to be a lack of understanding of what self-cert is for.
Self-certification lending is intended for those who cannot prove their income; or for whom traditional lending practices of considering variable income at a rate of 50% would cause unfair difficulty in borrowing.
Many types of employment are paid predominantly in commission income, such as recruitment consultants, estate agents, business development managers and stock brokers.
These are all forms of employment that may produce a need for self-certification.
Others that own a business which produces very irregular income streams; such as those in the tourism sector; or paid upon completion of irregular contracts, may also need to self-certify; particularly when self-employed.
What it is not is a means to inflate income. Lenders will withhold the right to contact employers and ask for bank statements and other supporting information. So if the figures are out of the ordinary, lenders should be asking questions; hopefully, if the FSA keep this in mind, it won’t be banned.
There is a home for self-certification that shouldn’t be ignored.