Self Certified
Self Certified | Is It Really What You Need?
Self certified - An Explanation
A wide variety of people qualify as self certified, which means they need a certain type of mortgage. For a typical mortgage a lender will want to check proof of your income to ensure you can make your repayments. However, people who are self certified may struggle to prove how much they earn. Perhaps you work for yourself- you're a taxi driver, a hairdresser or a window cleaner. Or maybe you run your own business and your turnover has been changing each year as the business grows. Anybody who qualifies as self employed will qualify as self certified.
However, it is not just people who work for themselves who qualify as self certified. People who work for employers but who do not have a permanent contract also qualify. For example, you may move between different workplaces as a contractor. Even if you spend long periods of time in each workplace- sometimes up to years- but are never placed on a permanent contract, then you will still qualify as needing a self certified mortgage. You may be in a profession that requires you to work for a company and then invoice your employer later- freelance journalists and IT consultants are two examples of this kind of worker.
However, there are circumstances in which people employed on a permanent contract may also qualify as self certified. Car salespeople and advertising executives for example, are often paid a lower basic salary because they earn commission based on how much they sell or how they perform at work. As a result, their salary may fluctuate from month to month, and so they may need to opt for a self certified mortgage in order for their commission payments to be taken into account alongside their salary when a lender is deciding how much they can borrow. Similarly, those who work in jobs where they receive an annual bonus that may change from year to year, for example City workers, may also decide a self certified mortgage is the best option for them.
Similarly, some people may have more than one job. You may work full-time in a permanent job, but top up your income with additional work in the evenings and at weekends, for example delivering and selling from catalogues. Because it will not be included in your main salary, if you want the additional money from your second job to be taken into account by your mortgage lender then you will need a self certified mortgage.
However, the same mantra applies to self certification uk lending as to any other; that is the greater deposit you can put down - and the cleaner your credit record - the better self certification uk mortgage you will qualify for.
I am self certified- what next?
Being self certified does not mean you will not be required to provide any financial information to a mortgage lender. It simply means that rather than a lender looking to documents such as pay statements as evidence of how much you earn, you will be asked to declare how much you have earned in previous years. Some lenders may ask for information from your accountant for example, or copies of bank statements, to get an idea of how much you have previously earned. However, for those whose income is likely to fluctuate, or who would like more than one source of income to be taken into account, a self certified mortgage could be the only way to achieve home ownership.
