| Mortgage lenders may seem hell-bent on sharing their | | | | to pick up the pieces if all went pear-shaped. |
| money with those borrowers in steady employment, | | | | Self-certification mortgages do tend to be lumped in |
| but what happens if you are newly self-employed | | | | with lending to the insolvent and uncreditworthy and |
| and can offer little evidence that you can be relied | | | | rates are unlikely to be the best on the market, but |
| upon to keep up your monthly mortgage | | | | needs must when you need a roof over your head. |
| repayments? The answer, if you have little in the | | | | Lenders usually expect the borrower to provide a |
| way of liquid assets, is not very much. | | | | substantial deposit. You will probably need to |
| As long as you can put down a chunky deposit on | | | | contribute at least a fifth, more probably a quarter, |
| the value of the property, you wish to buy, you are | | | | of the property's value. |
| still in with a chance of a mortgage. Of course, you | | | | Mortgage lenders regard it as too risky to provide |
| can't provide the lender with copies of payslips or an | | | | more than a 75% or 80% self-certification mortgage. |
| employer's reference and, unless you have been | | | | And if "self-certification" suggests that you simply |
| self-employed for three years or more, it won't be | | | | cross your heart and promise to pay, it isn't quite |
| satisfied by examining your accounts. | | | | that simple. Lenders won't take your word that |
| Even if you have been trading on your own for a | | | | you're good for the repayments. |
| long period, you may feel that the net profits shown | | | | They will check your credit rating, and may go on to |
| do not create the sort of picture that would impress | | | | demand even more evidence or evidence of earning |
| a potential mortgage lender. | | | | power than they would from the established |
| The solution is the self-certification mortgage, a | | | | self-employed. |
| personal finance product that arrived in the early | | | | Usually the main form of proof is a signed |
| 1990s to cater for those borrowers who were able | | | | accountant's certificate, but this may need to be |
| to lay down a reasonable deposit but would have | | | | supported by bank statements for your business |
| difficulty proving their earnings. | | | | account, over whatever period the lender specifies. |
| Some lenders felt that this was an underrated | | | | Also, if you already have a mortgage, you may be |
| market and that employees were as likely to lose | | | | expected to provide your statements to show that |
| their jobs as the self-employed were likely to lose | | | | you are a reliable customer - if you pay rent, your |
| their jobs as the self-employed were likely to fail in | | | | landlord can be asked to provide your statements to |
| business. | | | | show that you are a reliable customer - if you pay |
| In fact, they argued, the self-employed were better | | | | rent, your landlord can be asked to provide a |
| motivated not to fail, and might be better equipped | | | | reference to the same effect. |