SELF CERTIFIED MORTGAGES

Due to certain employment situations; prevalently the self employed or those with income bases that include unverifiable incomes, many traditional mortgage loan options are beyond the reach. For those people who own their own businesses or professionals who are self employed with unverifiable incomes  or even for those with verifiable incomes that receive a large portion of their income from bonuses or tips, the traditional mortgage can be next to  impossible to qualify for and self certified mortgages are the only viable option.

Self cert mortgages are often loans that are advertised as ‘no-doc’ and ‘low-doc’ mortgages. What this means is that the borrower will be required to provide less documentation to qualify for the mortgage than with traditional financing.

Primarily the proof of assets and income is not required. Generally, the borrowers of self certified mortgages will simply state what their annual income is expected to be after a thorough estimation is made and the lender performs a credit check and looks at the borrower’s credit score.

The borrower may also need to provide creditor references with payment histories to the lender. Remortgage self certification works in the same basic way; however, the existing property goes under a valuation process before a remortgage self certification is granted.

 Due to the lessened qualifying standards of the self cert mortgages, the interest rate is generally higher. This interest rate can be reduced if you offer a larger down payment for the home or property. With the interest rate almost always being higher self certified mortgages or a remortgage self certification is usually not the first choice but often the only choice for the self employed. If a traditional loan is available it is recommended due to the ability to get a lower interest rate and qualify with a lower down payment.

Still, many people select self cert mortgages because with all the unverifiable income added in they will often qualify for a larger mortgage loan than if they used only the verifiable income. If a large portion of your income is from tips, bonuses and or commissions it may be in your best interest to go for self certified mortgages or to obtain remortgage self certification for the larger loan available.

Keep in mind that getting self cert mortgages for the larger loan amount may overextend you with the higher interest rate if you have been too optimistic in your estimation of the unverifiable income used.