If you have had a difficult time getting your mortgage approved because you do not have pay slips to submit, you are not alone. In fact, estimates indicate that around 15% of all adults in the UK are self-employed. This means that there are many people in the same situation that you face. They have no pay slips to offer a mortgage lender, yet they want to buy a home.
One option to consider when in this situation is to apply for a mortgage with mortgage self certification. Mortgage self certification is a mortgage structure that allows you to predict your income, rather than prove it with the standard documents. These mortgages are not standard mortgages, and therefore can be harder to find. Not all lenders offer mortgage self certification. If you are able to find a mortgage provider that does offer this structure, you will find that the mortgage is more expensive as it carries higher interest rates than a standard mortgage.
So can you apply for mortgage self certification? If you are self-employed or have some other form of variable income, you can. You may want this type of mortgage if you are paid on commissions or have bonuses added to a small base salary. However, not all self-employed individuals need or can benefit from this type of mortgage.
Remember, mortgage self certification makes your mortgage more expensive. If you have been in your current position for three years or more, you should consider applying for a standard mortgage. You can use your tax statements and accountant’s statements to verify your income. This will get you a better rate on your mortgage than you would receive if you applied for mortgage self certification.
Also, a self certification mortgage requires a large amount put down on the property than a standard mortgage. If you are able to place a large down payment on the property, you can consider this mortgage structure. If not, you should wait before applying for your home mortgage. The usual loan-to-value offered on a self certification mortgage is 75%. If you cannot put up 20% or more for the property, you may not be able to qualify for this type of mortgage.
Mortgage self certification is not for everyone. Those who can successfully apply for a standard mortgage should do so. Also, those who do not have money to place as a down payment will find it difficult to be approved for this type of mortgage. However, those self-employed individuals who have the money but cannot apply for a standard mortgage can benefit from mortgage self certification.
