Mortgage self certification is a process wherein a homebuyer states his or her income because pay slips are not available. This could be because the homebuyer is self-employed or has a variable income based on his line of work.
Just about anyone who would qualify for a normal mortgage, but cannot get one due to a lack of employment verification records, can get a mortgage with self certification. Freelancers, people who own their own businesses, are self employed, work for commissions, or have income for several different sources can all apply for mortgage self certification.
Not all lenders currently offer mortgage self certification. You will need to find a lender that does. If you are working with a mortgage broker, you can ask your broker to help you locate a trusted lender.
Self certification mortgages usually cost more than a traditional mortgage. The lender is taking a risk when offering this type of mortgage, and therefore will charge higher interest rates or fees for the privilege of borrowing money.
Most lenders want a fairly low loan to value ratio when offering mortgage self certification. In other words, they want you to be able to place 20% or more down on the property before you turn to them to borrow money. However, there are some lenders that are now offering higher loan to value ratios, including some offering loans with 95% loan to value ratio. This means that the buyer only put 5% down on the property. Keep in mind that this type of loan typically costs more than one in which you put down a decent amount for the property.
If you have three or more years worth of self-employment records that can be verified by an accountant, you will probably be better off applying for a traditional lender. Otherwise, you should apply for mortgage self certification.
The answer to this question will depend on your chosen lender, but most lenders are satisfied to take your word for your income amount if you can put 20% or more down on the property. You may have to show documentation from your accountant or a few bank records if you are placing a smaller deposit for the property.
