Self-cert / Fast-track

theone_4

Hi, I've been self employed for about 16 months and do my own accounting etc (self assessment). My mortgage details/requirements are as follows:

FTB
120k property value (75% LTV)
90k loan (30k savings)
31k/yr earnings
Self employed, no audited accounts (but can provide bank statements of earnings if needed)
No bad debts/ccjs etc

I originally went to the FA at the estate agents (not whole of market) and they came up with the following deal:

Bristol & West Self-Cert - 5.39% fixed 2 yrs (+£599 arr fee)

The offer seemed reasonable considering it was self-cert, so I went ahead with it. Had the valuation done and homebuyers report which cost £460 (£100 for valuation). Unfortunately this eventually got declined due to the property being an ex-local authority property, which Bristol & West will not lend against. (I should add that nobody realised it was ex-Local authority until the valuation pointed out that it _might_ be and the solicitor then confirmed after Bristol & West queried it - even the current vendor was not aware).

The FA at the Estate Agents has now recommended GMAC Self-Cert @ 5.49%, but I'd much prefer to stick with a more mainstream lender if possible (I've heard bad things about GMAC).

So I went to L&C and they have come up with the following deal:

Halifax - 5.29% fixed 2yrs (no arr fee)

Obviously this is a better deal (and with a more mainstream lender), but what is the likelihood of Halifax accepting me? The L&C guy says that there is a good chance the application will be "fast tracked" and therefore will avoid the usual checks of asking for accountants letters etc. Is this likely in the above scenario? (i.e. self employed, 75% LTV)

I need to be fairly sure they will fast track it, since I don't want to be paying out £300 for a valuation with them only to get declined (especially since I've already lost £100 on the current valuation).

Any advice appreciated!!

TIA

AndrewSmith

Fast track and self cert are definately not the same thing, and even using fast track it is not uncommon for the Halifax to ask for proof of the income for verification purposes.

They can, in fact, ask for anything they like.

I have just lifted this sentence directly from the Trigold Broker sourcing system, Halifax criteria :


For loans under 75% LTV, verification of income may not be required, dependent on credit score. On request customers must be able to provide income verification regardless of LTV. Halifax will advise full requirements on application.

Self employed applicants under 75% LTV can supply an accountant's letter or the last 2 years' tax assessment.

So if you are being told that they will require no proof of income then this is not necesarily the case quite clearly.

Tread carefully and, if you are still sure you want to go with the Halifax, ask the broker to apply for an AIP which costs you nothing before submitting a full application. This will come back telling you what exactly they require to proceed with a full application. Make sure the broker is telling the 'whole truth' about your situation / employment status etc.

An AIP does however leave a credit check stamp on your credit file.

theone_4

Thanks for the clarification AndrewSmith.

My previous credit check came back grade-A (or something like that), which I believe means no problems. So it sounds like I will know after I get an AIP from them whether or not it will be fast-tracked? (if I've understood you correctly) If so, that's good news as I won't be wasting £300 on the valuation!

Thanks again.

payless

If following the Halifax route , check that the application is submitted confirming correct time "self employed"

AndrewSmith

The thing to be careful of is this:

Self Cert means that you certify your own income as it cannot be proven either by payslips (employed) or by certified audited accounts (self employed)

Fast Track means that you are able to prove your income in the normal ways however the lender MAY not ask for income verification.

It does not mean that they dont need it, more that they may not ask for it.

Subtle but big difference.

Even an AIP cannot definately say whether they will ask later for income verification. What they will need at the very least is usually some proof of self employment such as letterhead or accountant's letter.

Sorry if this is a bit waffly but you need to clearly understand the very subtle but vast difference between the two or you could, again, be wasting valuable money on valuations etc.

MortgageMamma

Abbey will also fast track, and I believe it is a good idea to approach them, In the north of england they have the new business processors and underwriters on the same desk. A broker would submit the application via the internet and then could phone up to see if the case is fast tracked or not an hour or so later. I do it all the time as I have a good relationship with them in the office. I am fairly sure you would fit abbey's fast track criteria if you have a good credit score and -75% LTV. You've got to be careful doing all this though as if you apply to lots of lenders it will leave a footprinton your credit file which could be damaging.

theone_4

MortgageMamma wrote:

Abbey will also fast track, and I believe it is a good idea to approach them, In the north of england they have the new business processors and underwriters on the same desk. A broker would submit the application via the internet and then could phone up to see if the case is fast tracked or not an hour or so later. I do it all the time as I have a good relationship with them in the office. I am fairly sure you would fit abbey's fast track criteria if you have a good credit score and -75% LTV. You've got to be careful doing all this though as if you apply to lots of lenders it will leave a footprinton your credit file which could be damaging.

Actually, this credit check footprint thing is worrying me a little now I think about it. Before approaching Bristol & West the FA tried an AIP for Northern Rock which failed 'cos they wanted 2yrs audited accounts (FAs fault because he didn't read there criteria properly). Also, for the latest GMAC he has sent me an AIP, so I assume now I've had a total of three credit-checks already in last 4 weeks.

So if I proceed now with L&C/Halifax that will make 4 credit-checks in a month... problem?? (I have very good credit history, so these checks should be the only issue)

TIA, again

AndrewSmith

Putting it simply:

If you can prove income via an acceptable method to the lender applicable then Fast Track may be appropriate

If you cannot then you may need to consider self cert.


Too often there are brokers and applicants alike who will try and use Fast Track as a substitute for Self Cert. It is Ok sometimes as you may get away with it, but when you have been dealing with lenders as long as I have then you will know that unless you fit the criteria for the lender then it is not wise to submit an application to them.

I have lost count of the number of times I have seen brokers try to use Fast Track instead of self cert and have, inevitably, got bitten on the bum when the lender has decided that it wants proof of income prior to offering the mortgage. They do after all reserve the right to do this.

Fast Track is a facility offered by the lenders to help speed applications through when they are deemed as a low risk case to the lender.

Sub 75% borrowing does not automatically mean it will apply.

When submitting a case on a full status basis you should be prepared to always be able to produce all evidence of income etc that they may ask for. If not, you could end up, as I have seen many brokers and applicants, looking very silly when you cant.

MortgageMamma

Fair point Andrew, but if you can submit then confirm if it's been fast tracked or not BEFORE the further info is requested then to only possible consequence to a client is a credit rating footprint. as long as the clients understand the implication of this there's nothing untoward. However, plenty of good self cert deals out there at the moment too....horses for courses.

To the OP, if your credit rating is good 3 credit checks won't kill it, if it was bad it would quickly make it a lot worse.

AndrewSmith

Possible however it is sometimes the case that the lender will imply that the case is being Fast Tracked only to request income proof prior to releasing the mortgage offer.

Good credit score is not the only factor that will dictate whether they require proof of income, length of time self employed will also play a very important part in this case.

theone_4

AndrewSmith wrote:

Putting it simply:

If you can prove income via an acceptable method to the lender applicable then Fast Track may be appropriate

If you cannot then you may need to consider self cert.

Would bank statements of the regular income be considered acceptable as proof of income to Halifax? (I'm trying to find terms & conditions on their website, but not having much luck) If it's not, then it sounds a bit risky.

MortgageMamma: know of any self-cert mortgages that don't mind ex-local authority properties, at a reasonable rate and not a sub-prime lender? Maybe I need to go back to my broker and specify self-cert... so many options!

Thanks to you all.