Self Certification Mortgages explained and help available

Below, we take a more detailed look at Self Certification Mortgages, and why mortgage lenders have changed their attitude towards the self-employed community. We discuss the circumstances in which Mortgage Lenders will consider Self Certification and how Shire Direct can help with a Self-Certification Mortgage even if you have a poor credit history!

Table of Contents:

What is Self Certification?

So, 'What is self certification, and what are self certification mortgages?' you may well be asking.

The Self Certification Mortgage is a type of mortgage whereby the borrower can demonstrate their income and earnings to the Mortgage Lender by way of an estimation and other alternatives for situations where it may not be possible to precisely determine and prove income through more conventional means.

As we discussed in the introduction, the Self Certification Mortgage is one of the most radical changes to the UK mortgage market place in recent times, and has come about because of the seemingly ever increasing number of self employed borrowers in the United Kingdom, amazingly our country now has over 3 million self employed people!

In recent years the mortgage lenders have responded to this huge potential market, by making special provisions for those borrowers who work on their own behalf. These have been needed because traditional income multipliers and requirements have become too restrictive to assist the many potential good self-employed borrowers that were often denied mortgage funding.

However, it is true to say that not all mortgage lenders have embraced this 'new-fangled' self certification mortgages concept, and they continue to insist on a minimum accounting profile of three years audited accounts, which show strong Net Profits.

Why have many lenders changed their attitude to the self-employed when it comes to self certification mortgages?

Well, there are several reasons why mortgage lenders have changed their attitude to the self-employed borrower when it comes to self-certification mortgages, and these include:

The size of the self-employed market place
The fact that accountants tend to mitigate profits for tax purposes as heavily as they can, in order to take advantage of the various allowances available to those in business.
Reduced profits ensue, as does subsequent tax paid by company directors and self-employed traders and professionals
To produce three years audited accounts showing healthy Net Profits can generally take between 4 and 6 years, and often longer, from the commencement of trading.
Self Certification has now been in existence for almost a decade, and mortgage lenders now have reasonable statistical evidence to be confident that their lending skills have been justified during this period.

In what circumstances will lenders consider an application for a self certification mortgage?

Here at Shire Direct, we understand that not everything in life is straightforward. We appreciate that people in business don't have the luxury that the stability of being employed in, for example the public sector, will provide.

If you work for yourself, you will be only too aware that your income is likely to fluctuate dramatically, and your past records may not be reflective of current trends of remuneration. That's why self-certification is a strong feature of many of the mortgages we arrange for our customers.

We understand that fluctuations in income can occur for a variety of reasons, and may have happened because:

you have recently increased your turnover as a result of a business expansion
you may be working additional hours
you may have recently employed more labour, and as a result increased your turnover and profits
you may be in a start-up situation
you may have recently increased your hourly rate charges
you have just secured a new and lucrative contract
you intend to use the capital raised to purchase new equipment which will increase your productivity, turnover and profits.

I'm Employed. Can Shire Direct still arrange a self certification mortgage for me?

Naturally this will depend on your circumstances.

We acknowledge that certain types of employed borrowers can be in receipt of irregular or non-conventional payments, and although these borrowers are able to adequately meet their contractual mortgage payments, the application of traditional income multipliers could shut the door on being able to get a mortgage. We're happy to report this isn't the case at Shire Direct!

We have an extensive portfolio of Mortgage Lenders and Mortgage Plans within our Lending Panels, and we can certainly consider self certification mortgages in instances where an employed borrower for example:

receives seasonal or irregular overtime payments
is likely to receive a large annual bonus
has recently moved job and expects their present income to increase with future promotion, bonuses or commission
has part of his annual income paid in the form of dividend income.

Are there any other circumstances where Self Certification Mortgages can be properly used?

Yes! there are a series of of other circumstances where self certification mortgages for borrowers who are looking to self certify their income can be effectively used, and these include instances where:

speed of completion is important
there is a contract deadline
you are buying a property at an auction sale
you may receive a secondary income from a self-employed position
there may be additional income from a family member living with you.

IMPORTANT! Self Certification Mortgages are NOT...

a means to achieve mortgage funding because process of income verification is not undertaken. Self Certification is not an invitation to exaggerate your income to achieve a lender's income criteria. The misrepresentation of income by deliberate exaggeration is a criminal offence and may result in an action for fraud.

One of the main aspects of providing you with a suitable mortgage product; is that it must be affordable now, and into the future. Remember, a mortgage is probably the largest financial transaction that you will ever enter into, so it's absolutely crucial that you get the correct advice from the outset!

My circumstances mean that I am going to have problems proving my income, can Shire Direct help me with a Self Certification Mortgage?

Yes! We have an extensive variety of mortgage lenders and mortgage products available in our panels that have been specifically designed to consider those requiring self certification mortgages. We'll also carefully assess your circumstances with you to ensure we can recommend the best course of action.

Can Shire Direct help me with a Self Certification Mortgage even if I have a poor credit history?

You'll be happy to know, in most cases, yes!

Remember our professionally qualified mortgage advisors are available to discuss the options open to you, and we can usually come up with a solution - even in the trickiest circumstances, including situations where you may have one or more of the following:

County Court Judgements (CCJs)
Credit Defaults
Mortgage Arrears - past or present!
Individual Voluntary Arrangements (IVAs)
Personal Bankruptcy

We're confident that you'll find our service to be friendly yet professional, helpful and accommodating. We're not judgemental, and look for reasons to accept your business and provide you with an appropriate and suitable mortgage solution.

So, if you think we can help then please don't hesitate to Contact Us to discuss your requirements, naturally without any obligation!

You can call us on Freephone 08000 282 281 (lines open between 8am and 10pm, 7 days a week), or alternatively you may prefer to enquire online at any time. In either instance we'll be delighted to provide you with a rapid in-principle decision. So get in touch today, we think you'll be glad you did, and afterall you've nothing to lose, and everything to gain.

Well, that finalises our look at Self Certification Mortgages, and how Shire Direct can help arrange a Self Certification Mortgage to suit you even in the trickiest of circumstances. Don't forget there's a wealth of mortgage related information throughout the pages of this website, and remember that we're only ever a free telephone call or couple of mouse clicks away and would love to assist in any way we can!

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.

There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.

THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

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Self Certification Mortgages explanation

Self Certification Mortgages explained, along with how Shire Direct can help arrange your Self Certification Mortgage!