Mortgages UK – taking each case on its own merit for self certification mortgages.

In today’s mortgage market, being self-employed isn’t as big of a problem with lenders as it once was. Many self employed borrowers don’t show much income on their tax returns, yet it is obvious that self-employed borrowers do make good money. Unfortunately, most banks and lenders don’t see the big picture as to how a self-employed borrower is really doing, and many times are turned down for the wrong reason. We understand this. Because of this very reason, many of our mortgage loan programs are specifically designed for self employed borrowers.

Many self-employed people are earning big money. But the stumbling block comes in the fact that standard mortgage lenders tend to be extremely suspicious of anyone who cannot prove their earnings via pay slips. In place of payslips, self-employed workers may be asked to provide accounts that show their income over the last three years. However, in many cases, these accounts will not give an accurate reflection of how much money a self-employed person is making.

The situation is even worse for the newly self-employed, as they may not yet have been trading long enough to have had three years' worth of accounts prepared.

This is where mortgage lenders who specialise in self-certification mortgages and self-employed mortgages come into their own. These types of lenders appreciate the different and complex working patterns of the self-employed. They are prepared to look at each case individually and assess each mortgage application on its own merits. In many cases, self-certification means that you do not need to supply any proof of income - you just declare what your income is without having to provide any supporting documentation.

In addition, specialist self-employed and self-certification lenders are more likely to offer flexible mortgage products that allow overpayments and underpayments. This is ideal for people whose income can fluctuate throughout the year, as it means you can overpay when times are good and underpay if you're business is going through a quiet period.

Self-certification mortgages fit under the so-called non-standard banner and there are around 15 lenders in the market. The market is becoming more competitive and deals are therefore improving. You are still likely to pay more, but there should still be the opportunity to switch to a better rate - and, often, another lender - a few years down the line.

However, some self-certification mortgages are better than others, and, if cash flow is a problem, it's worth checking out those that offer payment holidays and the facility to pay more when you can. It may well be worth seeing a broker, as they can explain any intricacies, but be sure it is a reputable firm and regulated under the mortgage code. Whereas standard mortgages typically offer a 95% loan to value, self-certification mortgages almost always require a higher deposit: a loan-to value of 90% and, more commonly, 75% is usually offered.