Self Certification Remortgage

Before accepting a mortgage application, lenders need to know that the applicant is financially able to pay back the loan. For most borrowers this isn't a problem, but what happens when you're unable to prove how much you earn?

Mortgage lenders calculate the maximum amount of money you are able to borrow by looking at your income. Most lenders apply the following rules:

• 3 times gross salary if a single borrower
• 2.5 times gross joint salaries if two people borrow together

If the required mortgage you need falls within these boundaries, the lender will still need proof that you earn as much as you say. Most borrowers in conventional employment are able to back up this claim by providing wage slips and/or P45's.

But what do borrowers do if they have no way of proving their income? The self employed, directors of small companies and those on short term contracts are unable to provide adequate proof to satisfy a lender.

This means that lenders believe these borrowers don't have the means to repay a mortgage, and their application will be declined.

What is Self-Certification?

To cater for this market, lenders now offer an opportunity for borrowers to declare their income themselves. Known as self certification mortgages, borrowers who cannot provide three years worth of audited accounts are only asked to provide a credit check and references from a bank or landlord.

Self certification is a great way for borrowers to find the funding they need, however there are a couple of drawbacks:

• Some lenders require a sizeable deposit before accepting an application (although some lenders will lend up to 90% of the property value, in most cases the maximum a self certification borrower will get is 80%)
• Interest rates tend to be higher compared to other mortgage deals available

To find out more information on self-certification remortgages, we recommend completing one of our online forms to get in touch with one of our mortgage experts.

The More Group can regulary obtain mortgages for clients with impaired credit at an overall cost for comparison of 7.8% APR.

When considering a remortgage, always remember: Your home may be at risk if you fail to keep up repayments on your mortgage.