Self-certification

A self-certification mortgage is often referred to as a non-status mortgage, and is available to both: employed, self-employed, first time buyers, and to those with an impaired credit history. They have become popular in recent years, as working environments and practices have moved away from the conventional 9-5 job, and where monthly income might come from several different sources.  A self-certified mortgage is specifically designed for people whose income is difficult to assess using standard underwriting criteria used by most mortgage lenders.

Self-certification mortgages allow you to declare your income without having to provide the documentary evidence usually required when applying for a mortgage. This facility could therefore assist the following categories of employment:

• both self-employed and employed
• employees on short-term or part-time contracts
• employees who depend upon business or commission for a significant proportion of their income
• unsalaried company directors
• low wage earners with other income or material assets upon which they rely for future payment
• people with seasonal earnings
• people with more than one income
• contract or freelance workers

Whilst there is no need to supply accounts, bank statements, employers’ letter, payslips, or other proof of income with self-certified mortgages, ACF does prefer this proof to be provided as it helps ACF establish that there is income to support the mortgage application. Please be aware that a significant downside to self-certification mortgages is that the interest rate charged will almost certainly be higher than it would be on a mortgage where proof of income is provided.  Please inform ACF if your position changes and you are able to provide this type of income proof, because ACF might be able to find a mortgage on a lower interest rate.

Risk Warning

When self certifying your own income, it is important to ensure that you have accurately assessed all income streams and that the amount stated correctly reflects this.  Also, check the monthly repayments that you are committing to, because they need to be affordable both now and in the future if interest rates rise.

Should you fail to adhere to the above, if for example your income is overstated, you might not be able to afford the payments on the mortgage – especially if interest rates rise – and this could result in your home being repossessed.  Therefore it is imperative that your income is stated accurately.  You should be aware that if you make a fraudulent statement, you will be liable to prosecution.