Self Certified Mortgage

Are you self employed and have been seeking a mortgage but keep being turned down? The reason for constant rejection of your application could be that you happen to be self employed. Statistics indicate that approximately 3 million people in the UK are self employed, so if lenders are turning down every self employed person who applies for a mortgage they are turning away huge earning potential. Self employed could also define freelancers and consultants who generally perform jobs of work for various different people who then pay them. If these are your circumstances you might want to apply for a self certified mortgage.

Mostly the basis for the refusal to grant mortgages to self employed people is that they do not have a very stable income. For instance they might make a great deal of money in one month but nothing at all in the next month, and as this money is received from various sources it makes a computation of income more difficult. Also it is more difficult for a self employed person to prove income as they do not receive a salary slip or P60 form.

Self certified mortgages are designed to assist self employed people and they specifically allow the self employed person to draw funds of up to £1 million without having to prove income. With a self certified mortgage, all the self employed person has to do is declare income to the loan provider, no documentation for proof of income is required.

With a self certified mortgage, a deposit of 10 – 15% is required but this is solely dependent upon the terms of the loan provider and the interest rates charged will be more than you normally be charged for a mortgage. This is to compensate for the higher risk that the loan provider has to take. The amount that the borrower is allowed to lend will depend upon a calculation of his annual income together with that of his wife or partner and any other additional income.

It is wise for the self employed person who is utilizing a self certified mortgage facility to first see exactly what kind of repayment he can afford before applying for the loan amount required. The best type of installment would be an average amount that takes all fluctuations into account. Certainly shop around for the best interest rate you can find for your self certified mortgage and use any online sources you can find. This will ensure that you obtain the best possible value for your money.

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