» Read the full story

There has been a lot of newspages given up to self cert mortgages recently, but would a ban by the Government really make a lot of difference to those who cannot prove their income?

The Financial Services Authority has proposed that any mortgage products that could be accepted without any proof of income should be banned. It says that these are too risky to be able to continue – many people who are struggling with mortgage repayments are those who self certified their income in the past.

This has led to a lot of people prophesying that millions of self employed people and others who cannot prove their income to be left out in the cold – the Federation of Small Business, for example, has warned that by banning self cert in its current form, three million people will not be able to get a mortgage.

Is this true? If the FSA proposals become law, will millions of self certifiable borrowers be left out in the cold?

It is true that banning mortgages that need no proof of income could affect the mortgaging abilities of some people. But to say that all people who are deemed not to earn a regular wage will be unable to get a mortgage is simply not true. There has been a very limited number of self cert mortgages on the market for some time and people have still been able to get the right mortgages for their situation.

The Government, the FSA and the mortgage industry would never allow three million people to forego the ability to get a mortgage. Even if the FSA proposals come through, lenders may be inclined to offer mortgages to people with some proof of income. That could be an accountant's note, past tax returns or even a history of bank statements.

We simply do not know what the future of the mortgage market will look like, especially for those who cannot fully prove their income. But we do know that scare mongering and horror stories will not solve anything – with a good adviser and some great advice, anyone has a good chance of getting the right mortgage for them, regardless of regulation changes.

SOURCE: FSB, FSA, 19/10/09

Keep up with the latest news and comments on Self Employed Mortgages at the Self Cert Mortgage Blog