Is it still possible to get a Self Cert mortgage?

Thrugelmir

holly_hobby wrote: »

So, I sadly lament the loss of Self Cert mortgages, and a I do believe there remains a market for such products for the self employed individual.

There's no benefit from a lenders perspective. As you might as well throw all risk management procedures out of the window. Which ultimately was the demise of HBOS. In the way it conducted its lending policy. Appointing a sales person head of regulatory risk sums the situation up there.

Having been to lectures by both a former Finance Director of NR and a head of risk at HBOS. People were very aware of what was going on. Being paid off for large sums of money, to terminate their employment contracts is how matters were kept under wraps.

holly_hobby

TMB & B Mids of the later HBOS group - accepted SCert from employees ... which is where I believe the rot set in (and BOS offerred non-status mortgages <65% ltv !!) .... Halifax later chose not to check income on A & B fast track cases ( a sort of back door self cert if you will) ....

The original implementation of S Certs were for the self employed .. and were going in the late 80s early 90s, certainly well over 20 yrs ago , so its not that business that later caused the downfall of the groups mentioned in the mid-late 00s .... but later more cavalier lending/uw policies as evidenced above ....

(as far as I know NR didn't ever offer S Cert .. but were the purveyor of the 125% mge, which was based on a fragile business model to start with).

I do believe there is a place for them, or certainly a variation on a theme, returning to old s cert criteria of provision of bank statements in support of the figs submitted, as oppossed to reliance on full audited accounts.

But certainly the days of employed self certs are well and truely over .. which is as it should be, if fact, IMHO, they should never have been permitted in the first place.

For the self employed .. who knows .... time will tell ... !

H

Thrugelmir

holly_hobby wrote: »

(as far as I know NR didn't ever offer S Cert .. but were the purveyor of the 125% mge, which was based on a fragile business model to start with).

H

Lending is about risk and pricing that risk. Mortgage lending is "cheap" as it should be low risk to the lender. Lenders became "retailers" in their desire for growth and market share on the back of cheap money. Now that is no longer the case. In 2011 outstanding mortgages contracted for the first time ever. As lenders contracted their mortgage books. I suspect we have some years to go before we have a normal mortgage market again. So lenders have no need to take unnecessary risk.

holly_hobby

Of course that goes without saying - lenders are more cautious today due to past errors and the scrutiny they are now under ..

However I do beleive, that this doesn't mean there will never be a place for self cert, which is what the discussion is about, moreover if re-instigated, the application data should be measured and verified as it was in the early days, by med-low LTVs <75%, bank statments, and inland rev checks.

I do feel however, that the nervousness of the banks will make this a long way off, if ever .... although they can't really be berated for tough lending, in their trying to redeem themselves from the mess easy money caused the tax payer !!

H

Thrugelmir

holly_hobby wrote: »

although they can't really be berated for tough lending,

Prudent not tough.

We are merely turning the clock back. To when banks had bank managers not salespeople. .

holly_hobby

To be honest BDMS, who were a panel lender, closed their NB book as far back as 1991/2 due to their poor mge book, 3 x joint income for emp & S emp - being the brokers most fave product .... in the days when everyone else was 2.5 jnt !! (Gosh how we missed them when they went :D!!) ....

H x

dunstonh

thommy wrote: »

I'm sorry, but, you really can't expect me to roll over and agree that anyone that has/had/wants a self cert is a liar, using this as 'evidence'.

I mean, come on, no matter what terminology is used within the industry, quoting a somewhat simplistic, generalising Daily Mail article, still does not give you the right to tar everyone with the same brush.

I never said they all were. However, by the time of the credit boom, that is how they became perceived. Like posts above, they did have a place for self employed but the volume being done in the later years was just out of control.

I gave you one link to show you that the term had become mainstream. You can google thousands more if you want.

busybird

[QUOTE

I hope there will be a day when the initial fright of the fall out we have had, will be reviewed on a more balanced basis - and that the real value of S Cert Mges for the S Employed are again recognised, and re-introduced in some format.

Indeed it would be interesting to see the figs on what % of defaulted SC mges, pertained to employed individuals as oppossed to S Emp peeps - and how long each set of mortgagors were able to maintain the mge before affordability issues raised their head, i.e did affordability issues occur as soon as they were out of their product, or were the real viable reasons as to why they became unable to service the commitment).

Of course, there may be an element of abuse (I guess there always will be), but I think throwing the baby out with the bathwater is a mistake, and believe a return to max 75% LTVs we had for Self Employed - Self Cert mges back in the day (and only available for non-FTBs), would help somewhat to protect the lenders (and mortgagors !) interests - and I believe would assist in helping to develop activity in the rather stagnant market we are currently wallowing in.

[/QUOTE]

I completely agree with you, but then I would, as in the past we have taken advantage of the self-cert mortgages as we are both and have been, for many years, self-employed. We are now in the unfortunate position of our last fixed rate deal just expiring, My OH's income reduced, but not negligible, and having our large-ish property on the market in order to downsize. As the market is not currently conducive to selling properties such as ours quickly, we thought it sensible to re-mortgage (IO again) and to take an additional small amount to tide us over any unforseen eventualities until we sell. Given that our LTV is about 24% and our credit rating is excellent, we didn't think we would have a problem - especially as the repayments would be less than they are now, and we are managing those okay, we just don't have any savings to fall back on as the equity is in the house and we are realistic enough to know that long-term we will not be able to sustain this into our advancing years (in our 50's now and with an empty nest). Our mortgage advisor decided thought there would be no problem but having had a satisfactory valuation, it now appears the lender questions the affordability. We are aware we would take a hit of ERP but we are prepared to swallow that. What we were not prepared for, after thirty odd years of paying a mortgage and never getting into problems, suddenly finding that we are undesirable to lend to!

GMS

[/QUOTE]

I completely agree with you, but then I would, as in the past we have taken advantage of the self-cert mortgages as we are both and have been, for many years, self-employed. We are now in the unfortunate position of our last fixed rate deal just expiring, My OH's income reduced, but not negligible, and having our large-ish property on the market in order to downsize. As the market is not currently conducive to selling properties such as ours quickly, we thought it sensible to re-mortgage (IO again) and to take an additional small amount to tide us over any unforseen eventualities until we sell. Given that our LTV is about 24% and our credit rating is excellent, we didn't think we would have a problem - especially as the repayments would be less than they are now, and we are managing those okay, we just don't have any savings to fall back on as the equity is in the house and we are realistic enough to know that long-term we will not be able to sustain this into our advancing years (in our 50's now and with an empty nest). Our mortgage advisor decided thought there would be no problem but having had a satisfactory valuation, it now appears the lender questions the affordability. We are aware we would take a hit of ERP but we are prepared to swallow that. What we were not prepared for, after thirty odd years of paying a mortgage and never getting into problems, suddenly finding that we are undesirable to lend to![/QUOTE]

Did your broker not check the affordability prior to submitting the case?

Equity will not pay the mortgage, only income will.

Dave_Ham

The issue is and going forward will remain "tax"

Self Cert mortgages were great for those who optimise their tax strategy and therefore can still get the house that they desire based upon their "real" income

I am not saying I agree or disagree, but that is why they were priced at a premium. The banks knew it, brokers knew it and most self employed saved more in tax than they paid out for in a slight premium on their mortgageas they cannot declare their "true" income

These mortgages when lent appropriately were profitable to the banks and given the demand, they will come back in some sort of fashion. What that looks like only time will tell, but appreciate where it has left some mortgage holders as there is currently a gap.

Creative brokers and damaged credit brokers are already finding ways to circumvent this and again not saying this is right or wrong, but there are legitimate ways of getting around these issues.

How many more recent applications have included or precluded various family members and some banks are more open minded to non living parties to be on the mortgage. Just one solution.

Anyway - hijacked thread over. Good luck to above poster...



Dave