current/future situation self-cert mortgages

stingray

Anyone have any feedback? i know things are supposed to have tightened up.

Wutang_2

What do you want to know?

_Andy_

stingray wrote: »

Anyone have any feedback? i know things are supposed to have tightened up.

What is your situation and why do you feel a self-cert mortgage is required?

luckyfool

The FSA have published a consultation paper proposing a complete ban on all self certification and even fast-track mortgages, requiring lenders to check affordability on every single mortgage. Self Cert has been dead for a while now and is never coming back. What might happen is innovative ways of assessing income for "recently" self employed people. i.e. Some lenders will already lend based on 1 yrs accounts, and in the secured loan market there are "self cert" deals for self employed people who have been self employed for less than 2.5 yrs, where they lend based on whats going through their business bank account.

stingray

thanks. I have built up quite a chunk of equity via a good buy, have two properties (one paid off) but do not earn much money at the moment as a self-employed writer, nor do i intend to in the next few years! I can probably put down 3/4 of the money needed to buy a new house. Excellent credit rating, no debts etc.

opinions4u

stingray wrote: »

thanks. I have built up quite a chunk of equity via a good buy, have two properties (one paid off) but do not earn much money at the moment as a self-employed writer, nor do i intend to in the next few years! I can probably put down 3/4 of the money needed to buy a new house. Excellent credit rating, no debts etc.

That doesn't explain why you need to self-certify.

stingray

I need a little flexible accounting because I do not currently earn much money, as I explained. Multiply my salary and it would not come to the amount I want to borrow. If there's no self cert, fine I will look for a flexible accountant.

beecher2

Sounds like lying about how much you earn to me, unless I'm missing something. If you don't have the income to suport the mortgage you want, how will you pay for it?

stingray

beecher2 wrote: »

Sounds like lying about how much you earn to me, unless I'm missing something. If you don't have the income to suport the mortgage you want, how will you pay for it?

you totally miss the point.

Rating someone's ability to pay solely on their income takes no account of their spending. Say I earn 20000 a year but I live frugally. My neighbour earns 40000 but has a coke habit, penchant for flashy cars and even flashier women and sends his kids to private school.

So the reality is I have more disposable income than he.

Anyway I have two suitable accountants who are prepared to be flexible.

beecher2

stingray wrote: »

you totally miss the point.

Rating someone's ability to pay solely on their income takes no account of their spending. Say I earn 20000 a year but I live frugally. My neighbour earns 40000 but has a coke habit, penchant for flashy cars and even flashier women and sends his kids to private school.

So the reality is I have more disposable income than he.

Anyway I have two suitable accountants who are prepared to be flexible.

I'm not missing the point at all. Lenders do not solely look at income levels and check credit files and bank statements as well. If you are attempting to inflate you income in order to gain a mortgage I hope you are caught out as this is mortgage fraud.

luckyfool

stingray wrote: »

you totally miss the point.

Rating someone's ability to pay solely on their income takes no account of their spending. Say I earn 20000 a year but I live frugally. My neighbour earns 40000 but has a coke habit, penchant for flashy cars and even flashier women and sends his kids to private school.

So the reality is I have more disposable income than he.

Anyway I have two suitable accountants who are prepared to be flexible.

If it was for a buy to let property you would not have any problems. Lenders do lend based on affordability (i.e. they will deduct school fees etc where declared from an applicants income). However if you are suggesting that however frugally you live, and earn a hypothetical £20k, how can a lender responsibly lend you more than they think you can actually pay on that supposed income? Lenders will consider up to about 5 to 5.2 times salary on a good case with minimal outgoings, lending more than that is irresponsible. "Nudge nudge wink wink I'm self employed and actually earn 10 times what I tell the tax man", or "I've got a huge deposit you can always repossess me if I can't pay" do not count as responsible or ethical lending or underwriting practices.