Self Certificate Mortgages Prove Yourself
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Self-Certified Mortgages: Prove Yourself
Summary
For those without a regular salary or established financial history, bank managers, known for their cautious nature, may seem unwelcoming when it comes to loans. However, there are alternatives for those outside the traditional mold.
Understanding Self-Certified Mortgages
If you're self-employed or have an unpredictable income, consider a self-certified mortgage. The mortgage market has evolved, allowing more lenders to offer these options. Previously limited to niche lenders with strict conditions, self-certified mortgages are now available from major banks and building societies.
How It Works
Typically, self-certified mortgages require a larger deposit, often around 25%. To verify earnings, lenders may ask for three years of certified accounts, bank statements, and perform credit checks. Some options exist where you simply need to confirm your ability to afford repayments.
Who It's For
These mortgages primarily benefit the self-employed, but others can also qualify. If you work overseas or receive bonuses not reflected in your salary, self-certification might be right for you. Business owners and company directors, who often take a minimal salary but earn through dividends, might find conventional mortgages challenging. For those with erratic incomes, flexible mortgages that allow adjustments to monthly payments can be beneficial.
Considerations
Be aware that terms may be less favorable compared to other mortgage types, with potential for Higher Lending Charges or indemnities for the lender’s protection. The Financial Conduct Authority (FCA) has warned about brokers encouraging income exaggeration to secure larger loans. Misrepresenting your income is illegal and could put you at risk of unaffordable repayments and potential home repossession.
In summary, self-certified mortgages can provide flexibility for those with non-traditional income sources. However, it's crucial to provide accurate financial information to avoid financial difficulties.
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