Some people have a difficult time qualifying for mortgages because they do not have enough proof of their actual income. Freelancers, self-employed individuals, and those who work off of commissions or bonuses often experience this problem. While they have more than enough money to be able to pay a mortgage, the usual required proofs of income, such as pay slips, are not available. Unless they wait a certain number of years and can submit their tax documentation, they cannot qualify for a mortgage. Mortgage self certification is one way around this problem.
With mortgage self certification you will be able to provide verbal confirmation of your earnings. You may need to provide some proof of income, but a proof of total income will not be necessary. Of course, it may be tempting to lie about your income in this situation, but doing so will make you guilty of a criminal offence. You may need to provide documents such as your current mortgage and bank statements to help verify what you state as your income.
When applying for a self certification mortgage, it is important to note that the loan provider may have a maximum or minimum that is allowable for this type of mortgage. The maximums are often directly related to your stated income. Also, some lenders will require a greater down payment on the loan than they would with a traditional loan. The more you are able to place on the property before applying for the loan, the more likely it is that you will be approved for that loan. A requirement of 70 to 80 percent of the value of the property is not uncommon when you are applying for a loan with mortgage self certification.
Interest rates for self certification mortgages are higher than traditional mortgages, because there is a slightly greater risk on the lender’s part when lending to someone is self employed or has another type of variable income. For this reason, those applying for mortgage self certification should shop around to make sure that they are getting the best possible rate. Working with a mortgage broker is a good way to do this.
If you are self employed or have a variable income, mortgage self certification is one way you can qualify for a mortgage before you have three years of verifiable income to report. This means that self employment or freelance status is no longer a barrier between you and your new home. Talk to your mortgage broker today about mortgage self certification.
