Self certified mortgage?

peanutpie05

Can anyone help...?

(I did post a message earlier but it seems to have dissapeared )

It looks like we need to get one of the 'self certified' mortgages (where we do not need to provide proof of income).

We had one of these some years ago but it was arranged for us by a mortgage advisor.

Basically we have 190k equity and are looking to buy a house for about 340k. On our earnings - most lender wont lend us that much ... but I think we could get around this with a self certified mortgage.

Does anyone have any pearls of wisdom regarding these types of mortgage. Hints/tips/suggestions ... all very gratefully recieved:)

Many thanks

homer_j_3

self certs are not designed for people to inflate income and to give lenders a blissful ignorance.

If your real income will not satisfy on full status then self cert is not a "way around it". Lenders can still ask for proof of income even on a self cert.

herbiesjp

What are you two incomes?

You are buying at £340k - is the £190k all going towards a deposit or will this cover legals fees, stamp duty etc as well

Will the mortgage you need be £150k or more?

Lenders do offer pretty high income multiples nowadays

peanutpie05

herbiesjp wrote: »

What are you two incomes?

You are buying at £340k - is the £190k all going towards a deposit or will this cover legals fees, stamp duty etc as well

Will the mortgage you need be £150k or more?

Lenders do offer pretty high income multiples nowadays

I may be able to get some help from family with the fees (which I expect to be about 16k for agents fees and stamp duty). So, basically, we need to borrow about 150k just for the mortgage.

When we applied for a mortgage like this before ... I'm pretty sure the mortgage advisor used the figures from my husbands wages (he earns about 22k per annum) but still enabled us to borrow about 120k. At the time he said we could have borrowed even more if we had wanted.

I'm confused

MortgageMamma

Looks like you might have just had a dodgy adviser, I can't think of any self certs that allow 6 x income, who is your lender?

What is your joint income now?

peanutpie05

Can someone clarify the self cert mortgage 'deal' for me.

As suggested - maybe the person who arranged our mortgage (5yrs ago now) wasn't acting 'properly'.

I'm just not sure which is the best way to go about getting a 150k loan. Although I am self employed ... my business has only become profitable in the last couple of months. The earnings of my OH and I put together are about £27k. This seems to be too little for most lenders to give us a mortgage of £160k ... but is there any lender out there that anyone knows of that might do it?

peanutpie05

MortgageMamma wrote: »

Looks like you might have just had a dodgy adviser, I can't think of any self certs that allow 6 x income, who is your lender?

What is your joint income now?

The self cert mortgage I was referring to which the advisor set up for us was with the Woolwich.

Many thanks, pp05

AndrewSmith

Self cerify does not change the amount you earn, nor does it mean that a lender will lend you more than they would normally compared to a standard full status mortgage. In fact it is quite often the opposite.

Self certify is designed for people who cannot prove their income by the 'normal' methods of 3 years self employed audited accounts or payslips if employed.

Examples are:

Someone who has only been self employed for just over a year thus have not got 3 years accounts but know what their income is because of the last years trading.

An employed salesman who is paid largely commission thus does not have a 'steady' salary which would all be included by a lender.

Lenders offering self certify will still have the same, if not tighter, income multiple criteria as any other full status product. They also reserve the right to verify or check any of the details given. They will also normally require proof of employment status to veryfy that you are actually self employed or employed, whichever you declare. They can do this by checking against your National Insurance number.

Also do not get suckered into declaring 'cash' income that you do not declare to the inland revenue. Some advisers who are desperate for business will suggest you do this. You must not include any income that would not be ordinarily declared to the inland revenue as this cannot be deemed as earned income. You can, however, include state benefits, court ordered maintenance, pension income, 100% of all commission or second employment income.

Basically, if you are employed on a salary with payslips then you must go full status. There is no reason for you not to. If you are self employed and have no accounts, or are employed with irregular income then you may benefit from self certify.

Lenders on self cert will usually ask for bank statements in most cases to verify that you have some form of income. If the income on the bank statements looks a lot less than the amount you have declared then they may smell a rat.

Lenders reserve the right to prosecute under the law, mortgage fraud, where they can evidence that a borrower has declared false income. Yes it happens, I know of a broker and his client who are currently serving the remainder of a 10 year prison sentence for doing nothing more than this.

Lenders have criteria that must be fulfilled for a reason. That reason is to protect both the lender and borrower. After all in a declining market the last thing a lender wants is to have to try and sell your house after they reposess you.

Everyone complains about 'banks lending us too much' and irresponsible lending. Never forget that a lender will only ever give you the amount you ask for in the first place. Don't try and beat the criteria system given by lenders, it is there to protect you. If you cannot borrow the amount you would like to then I'm afraid you must just accept that and re-assess your purchase/mortgage amount.

Not preaching, just telling it as it is.

herbiesjp

peanutpie05 wrote: »

The self cert mortgage I was referring to which the advisor set up for us was with the Woolwich.

Many thanks, pp05

DO you bank with them or Barclays? This may be the reason the mortgage was agreed for you.

Anyway, what is the split between your incomes?
What is your gross yearly salary?
What is your OHs Net profit for the last 3 years?
How long has your OH been self employed?

peanutpie05

AndrewSmith - thanks for taking the time to explain it all to me and to point out the pitfalls.

I am self employed (though I wasn't planning on using my figures for the mortgage as I only came into profit this year).

I am confused as to why/how my mortgage advisor previously got me the size of mortgage that he did. Also - after that mortgage expired - I transferred the mortgage to the Abbey National and they lent us the full amount. I can only think that they have 'tightened up' on how much they will lend.

I completely understand what you say about protecting the lender and the borrower and I wouldn't want to try and take any short cuts ... I'd rather just not move if it is not financially 'do-able'.

Thanks again for the clarification, pp05

AndrewSmith

No problem

The difficulty is that in a complex case such as yours the ability to offer any real guidance falls way outside the scope of a chat forum.

Each case is different and, as rightly stated by Herbiesjp, there may be a perfectly viable reason why Woolwhich agreed the amount initially.

There are so many variables and things within a clients circumstances that can affect either way the amount a lender will offer that it is impossible to clarify any further I'm afraid. I am only able to offer factual generic information which hopefully may point you in the right direction.

Cheers

Andy