Are Self-Cert Mortgages Still Available?

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What are self-cert mortgages?

Otherwise known as self-certification mortgages, self-cert mortgages were a mortgage product in the UK that was previously used by self-employed applicants or anyone else that would struggle to prove their income. It allowed applicants to declare their own income when applying for a mortgage, without the need to back it up with proof.

These were offered by a wide range of lenders, although usually carried significantly higher Interest-rates than other types of mortgage product, due to the increased risk to the lender.

Why aren’t they available?

Self-cert mortgages were banned in 2009 by the Financial Conduct Authority after they were discovered to have been vulnerable to exploitation and unethical lending practices. Borrowers were often able to borrow substantially more than they could afford to repay, which resulted in lots of repossessions and contributed to the 2008 financial crisis.

The ‘Responsible Lending Guidelines’ were subsequently introduced, which now requires all lenders to ensure self-employed income is satisfactorily evidenced.

Getting a self-cert mortgage overseas 

If you venture outside of the UK, some European countries are still allowing the sale of Self-cert mortgages, as they are not governed by the Financial Conduct Authority, like UK lenders.

Despite the availability of overseas self-cert mortgages, the Financial Conduct Authority strongly advises that you do not obtain a mortgage via this route. As the lender is not subject to the rules and regulations of the UK, the borrower is putting themselves at significant financial risk.

Why is it not advisable to obtain a self-cert mortgage?

If you take an overseas self-cert mortgage you would not be protected against serious financial risk, and would be vulnerable to mis-selling practices.

Self-cert mortgages were colloquially known as liar loans in the UK, due to the vulnerability and the prevalent dishonesty associated with their use. 

What are the alternatives?

Self-employed borrowers have no need to use a self-certified mortgage these days, as the majority of Mortgage Lenders offer mortgage products to both employed and self-employed applicants. In fact, only around 3% of the thousands of mortgage products available in the UK won’t accept self-employed applicants.

No matter whether you’re a Sole Trader, Contractor, Limited Company Director or partner, so long as you are able to provide proof of income, you should have no issues finding a suitable mortgage. The following forms of income can be used in support of your application:

  • Personal salary and dividends
  • Share of net profit
  • Pension income
  • Investment income
  • Rental income
  • Freelance income

Speak to Mortgage Advice Centre

Here at Mortgage Advice Centre, our Mortgage Brokers specialise in helping self-employed applicants to find a product that will suit their needs. We have access to a huge number of lenders across both the high street and independent mortgage markets, meaning that we can not only find you the most competitive deal, but can find a lender criteria that will match your circumstances, whatever your trading type. Contact us today to see if we can help you.


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