mortgage noob

p00hbear

As everyone knows, with prices going up, it's really hard to buy based on the usual 3 or 4 multiplier. I've considered the self-cert route (after passing credit checks) and have been offered a 5.19%, 2 yr fixed mortgage with a reputable broker (whole of market but charge a small fixed fee). What do I need to look our for in these mortgages?

AndrewSmith

The first thing is that self cert does not change the amount you earn nor does it change the fact that the lender will still apply a multiple of 3-4x to your income.

False declaration of income is fraud and carries a maximum sentence of 10 years in prison for both the broker and the borrower.

Although a self certify mortgage means that a lender will generally not ask for income evidence they still reserve the right to carry out any checks they deem necessary.

They sometimes verify your National Insurance number with the inland revenue to determine your employment status, ie employed or self employed. If they are not happy with the case then it is not unheard of for them to request further proof of employment or income.

Also they may ask for bank statements as proof of identity and as part of underwriting the case to see how you conduct your finances. If you are salary paid this will show on the statements and will not tie up with an over inflated income figure.

Don't be tempted to inflate your income figure in order to self certify a mortgage.

They are for self employed people without verified accounts (newly self employed for example) or employed people who work on an irregular income ie commission only.

Lenders have criteria and lending limits for a reason. If you take a mortgage larger than these levels allow and subsequently can't afford payments it will be the lender that is blamed.

Andy

Robert_Sterling

I will second that.

p00hbear

Thanks for the advice..!

Dan29

I thought many lenders worked on affordability rather than strict income multiples these days?

AndrewSmith

Dan29 wrote:

I thought many lenders worked on affordability rather than strict income multiples these days?

Some do, however you are unlikely for it to work out at any more than about 4-4.5x single income or 2.75-3.5 x joint income.

It is sometimes possible to attain a mortgage higher than these multiples (yes I know that in extreme cases it is possible to get 5 x income, whether this is responsible lending/borrowing is another matter) however it can sometimes work out that affordability based lenders come up with an agreed loan of less than that offered by straight income multiples.

MortgageMamma

there are lenders who will lender between 4.7 and 5.5 times income. but you would be absolutely crackers to stretch that much. there is more to life that a nice big house. If your a bit short, buy something that needs work and do it up gradually like people traditionally did. Its nice to have a joint project with you OH.

MM

dunstonh

Ok, this is going back a number of years but when I used to do mortgages and just after Lloyds, TSB and C&G got together, it was noticeable that the C&G branches had more discretion on lending than Lloyds who had more than TSB. Whereas C&G branches had complete discretion and didnt work to multiples, the Lloyds branches still worked to multiples.

Also, the experience of the lending manager involved and their overall discretion limits would have an impact as well with one branch saying no and another saying yes.

I wouldnt be surprised if different distribution channels still have the same sort of differences with some lenders.