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How much deposit will I need for self cert?

For a self employed person the minimum deposit you will need will be 15%. For an employee the deposit increases to 20%. If there is any adverse credit in the background this may require a larger deposit.

The larger the deposit you have available the better the rates and terms available to you.

Mortgages with no proof of income

Most mortgage lenders base their lending decision on your provable income. For an employee this will probably be the last 3 payslips plus P60. If you are self employed then the standard requirement is to request lasts 3 years accounts.

Many peoples income are not so straightforward; employees salaries often comprise of commission or bonuses or  overtime which can amount to significant proportions of their salary. Because these elements are not guaranteed mortgage lenders may only allow a proportion of these earnings.

With self certification, all income can be included in the affordability calculation.

For a self employed person the annual accounts are always historic and reflect the business income for a period in the past. When a business submits accounts to the inland revenue they will deduct allowable expenses from their income. The net profits so calculated may be distorted by unusual or peculiar circumstances.

Self certification enables borrowers to declare an income on the mortgage application without having to provide proof of that income.

Lenders will typically request a larger than normal deposit for this type of mortgage. You should allow at least a 15% deposit for this type of mortgage.

Competition amongst self certification mortgage lenders has driven down mortgage interest rates to a position where they are only slightly higher than those offered on a full status basis.

Contact us to discuss what self certification mortgages are currently available.

It is important to distinguish no proof of income from self certification, in the former case the lender will not normally request proof of income in their mortgage processing. They can at any time request proof of income and if the proof is not provided the application will not proceed. Lenders are obliged by the Financial Services Authority to check a proportion of all applications submitted in this way. Mortgage lenders reserve the right to share information with credit reference agencies if they suspect fraud.

With a self certification scheme the understanding is that no proof of income will be provided. Mortgage lenders will still make enquiries and can still turn down applications. The extent of those enquiries will vary between mortgage lenders.

All mortgage underwriters will apply a reasonability test to the applicants stated occupation. A mortgage application from an office administrator earning £50,000 is likely to be looked at quite closely

Some lenders will seek to establish that the business exists and is actively trading. The nature of these enquiries varies with different lenders.

Self certification can be a useful option if you have a second occupation.

New businesses may not have any accounts or the accounts may not show much income. Traditional mortgage lenders will not be happy about lending to the proprietors of these businesses. Self certification however is an appropriate option.

Ideally the business should have been trading at least 12 months and there should be some proof of trading available. This might be the appointment of an accountant or registration with the Inland Revenue.

It is not necessary to employ an accountant if you are self employed. A number of lenders will be happy with you submitting your own accounts.

We can assist with a mortgage in most circumstances. Please phone to discuss your situation