Self Cert Mortgages

Self employed people are often in a quandary when it comes to securing a Mortgage loan. It becomes difficult for people with no fixed income, and perhaps, no definite income records to make a case for themselves when hoping to purchase property. The rising property prices make it necessary for people to turn to Mortgages to fund a property purchase. Mortgages typically require borrowers to furnish details that point to a regular income. Freelancers and people who work on contract generally have a tough time coming up with sufficient proof of their income. Buying property used to be a difficult proposition for such groups of people, till Self Cert Mortgages entered the scene.

What Are Self Cert Mortgages?

Self Cert Mortgages are specialised Mortgage loans that are offered to people who are self employed. This could include people who freelance or work on contracts or for commissions and bonuses. Also known as self certified Mortgages, these Mortgage plans allow self employed people an easy property purchasing option.

The Fundamentals of Self Cert Mortgages:

• Self Cert Mortgages are offered to self employed people who are considered as being high risk borrowers.
• Borrowers who earn above a certain limit will be able to apply for these loans. Often the minimum income limit is about £15000, though this limit varies from lender to lender.
• Some lenders advance Self Cert Mortgages that cover up to 85 percent of the value of the property. This again varies from lender to lender and from case to case.

Disadvantages of Self Cert Mortgages:

There is much apprehension with regards to the increased availability of Self Cert Mortgages. Many feel that Self Cert Mortgages invite a lot of fraudulent borrowers who have no intention of returning the money that they borrow. Banks often trip over themselves in a bid to win over the maximum number of customers. In order to achieve this, they offer very low rates and advance large amounts to undeserving customers. The onus is on lenders of Self Cert Mortgages to ensure that only deserving borrowers are able to secure loans.

However, a genuine borrower who fails to make payments will suffer because the Mortgage lender will take over his property. The ease with which one can avail of Self Cert Mortgages may also spur people to take on more and more debts.

Advantages of Self Cert Mortgages:

As is evident, Self Cert Mortgages have a number of factors recommending them. They are a boon for self employed people who are finding it difficult to get funding for a house purchase. Self Cert Mortgages require only self certification. A borrower is not required to furnish a large number of documents to prove his/her income. As a result, the buying power of the average borrower has increased considerably. One no longer needs the security of a regular job to ensure that one can get a suitable Mortgage. Self Cert Mortgages are there to meet the needs of people who have rather sporadic sources of income.