Self-cert Mortgages Bristol

If you are looking to borrow more than three times your earnings, or need to find a mortgage where you don’t have to dig out tax returns since you were sixteen, a number of big bank and building society lenders have put together self-certificate mortgages, designed primarily for the self-employed.

Be aware though, self-certification mortgages are limited in terms of the rates on offer, and while they do offer a useful stop gap, it is wise to only use them until your business has established itself enough to satisfy the banks. You can then move onto a full status. Because of this it is vital that the first thing you do is check that your self-certification mortgage does not tie you in with redemption penalties.

Self-certification mortgages will not require you to provide any documentation to back up your mortgage request, but will often expect bigger deposits of say around 25%, though some specialists will go as high as 90% without requiring proof of income.

The lender will assess the borrower's ability to manage the loan through its underwriting criteria, credit profiling and via details of previous payment history.

Lenders have now got wise to the fact that, with the big deposit, this is a minimum risk option and are even offering discounts to attract this potentially lucrative sector. Typically you might be looking at a 1.5% discount on the base rate for 1-2 years at which point you can move back onto a variable rate or re-mortgage. It is also worth asking about fee free rates for re-mortgaging as many lenders are trying to keep their customers.

Self-certification does require a certain amount of self-restraint. “The lender takes it as read that the information you present is the truth, so there is a danger of over committing. Borrowers need to be realistic and assess the risks,” says David Bitner, senior technical manager at mortgage broker Marketplace.

What’s required

They also don’t hand over money to anybody. Your credit history has to be respectable, you do need a minimum deposit of around or above 15% and be over 21. You normally need to have been trading for at least 12 months, although if have less than 20% company shares you are considered employed and it goes down to 6 months. Most lenders will take into consideration if you have been in full time employment and have taken your business with you into self-employment.

But the big boys aren’t always keen on lending based on growth rate or future expectations of the business; bonus’s or shares, for obvious reasons. Many though will take a view. It’s often a question of transparency; if the business is seen to be growing there may be room for negotiation. It’s here that a respectable accountant can make a difference. Names like PricewaterhouseCoopers do carry weight, but it’s still a tricky proposition and can leave the borrower vulnerable. It’s also a question of how much you want to borrow. Below 500,000 shouldn’t prove a huge problem. Over this a...