Self Certification

Disadvantges of A Self Cert' Mortgage
For those choosing a self-cert mortgage there often is no other viable option but it is still worth noting the disadvantages that they can carry.

Limited Availability
Although there are one or two high street lenders offering a minimal range of self-cert mortgages there are a small and finite number of specialist lenders who cater for the self-cert market with a full range of offerings and this means the opportunity for shopping around is limited.

That’s never a good thing no matter what kind of product you are choosing. Inevitably the advantage of obtaining a mortgage when other lenders don’t offer one has to be paid for and usually in the form of a higher rate. Lenders would argue that the self-cert mortgage carries a higher risk for them which may or may not be true but it is their perception. It is true that many new businesses set up by the self-employed fail in their first two years and those statistics are taken into account.

Higher Deposit Requirements
The self-certification lender may also require a higher percentage deposit than some standard mortgage – some up to 25% of purchase price.

The other unseen disadvantage to self-cert mortgages is that in many ways the borrower is left to make the decision themselves on how much they can afford. If they have a good handle on their own finances they may be able to gauge very accurately what they will be able to find in a year’s time but if they are too ambitious they may find themselves in difficulty. Once again advice is always useful and if the borrower has an accountant it may be worth a discussion with them first.

Limited Access
Some providers of self-cert mortgages will not deal with the public directly and will only operate through approved brokers. That makes the need to use an approved broker even more necessary when approaching this market.