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New proposals by the Government may mean that you need some sort of proof of income to get hold of a self certification mortgage – regardless of what happens, it may be time to get your paperwork in order for any future financial decision-making.

The Financial Services Authority has proposed that all mortgages in the future must only be offered if the borrower has proof of income. In the past this was not always necessary – many lenders offered loans, with no need of proof, to those who find it difficult to prove how much they earn, categorically, every single month. It might be that they worked on a commission basis, they might have freelanced or they might have relied on bonuses.

But this could be set to change. Because this was abused over the years by unscrupulous mortgage brokers and borrowers alike, too many people took out too much money and are now struggling. So the Government does not want this to happen again and has said the best way to do this is to demand that any mortgage borrower can show that they can afford the mortgage.

There are no rules as yet, but it is likely that self cert mortgages will almost become 'self-prove' mortgages – anyone who cannot show a regular pay cheque will have to show some other proof. This will not be difficult with the help of a professional self cert mortgage adviser who understands the approval process, but it will mean that anyone who used to be self cert needs to have all their paperwork in order.

So start thinking now about getting your bank statements organised, correlating invoices and receipts or even think about getting an accountant – having an accountant on your side may do wonders in improving your self cert chances. Lenders will also be very mindful of credit scores, so go online and check yours now so as to give yourself time to begin making yours better.

The future of mortgages for those who do not earn a regular wage is bright – a new dawn of regulation may mean a whole raft of new lenders and new, innovative mortgage products available. But until proposals become law, stay in touch with your self cert mortgage adviser.

SOURCE: FSA, 19/10/09

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