I want to self certificate - has this got harder due to credit crunch?

Dan_Collins_2

AndrewSmith wrote: »

With respect, having been in the industry for a long time now, and being somewhat of a specialist in self cert, let me share this with you.

Lenders use bank statements to asses more than just income, however if income is overstated then it will show on the statements. Common sense.

Also, you may only declare income that is able to be included on your annual tax return or declared as income to the inland revenue unless it is unearned income such as from tax free investments etc.

If a client tells an adviser that 'I earn extramoney on the side for cash and do not declare it' then this income cannot be used for mortgage purposes even under self cert. Ask your compliance officer, he will confirm that.

The compliance stance on this is that if you include income that you know a client is not declaring to the revenue for tax purposes then you are assisting and condoning tax evasion.

Self cert means self cert yes, I agree. However self cert merely means that you cannot evidence your income by the normal means of Audited Accounts or Regular Salary Payslips. That's all, nothing else. The lender reserves the right to ask for any evidence it sees fit and sometimes they will.

If you are not overstating or lying about income then why are you walking into trouble if the lender asks for bank statements? Are you openly admitting in a public forum that your understading of self cert is that you can put a false income figure or include non declared earnings?

I dont remember talking about false info, just trying to explain that self cert mortgages mean self cert. Most self cert mortgages only require and app, ID and proof of resi!

Please dont try to look clever, I have been in FS for to many years not to understand what a self cert mortgage is thank you very much. The last self cert mortgage I did was actually a client and a friend who's bank statements would not show is true income as he gets a large payment at the end of his contracts. There is a place for self cert, however brokers need to be strong and walk away from cases that are all lies.

It can be to easy to go down the self cert route, but there are normally other ways I agree. I have only done a few out of choice and because I can justify using the system.

yoshihirouk

Self-cert has been looked upon as being very dirty lately when it really isn't. A subsidary of HBOS is primarily a self-cert lender and offers a 90% ltv, self cert deal with reasonable rates. Bank statement are NOT required, nor are accounts or P60's. This is prime lending with a reliable lender.

Any compliance team will understand that "speed of service" and "proof of income not readily available" are perfectly valid reasons to self cert, although over-inflating income is not.

carolt

Oh come on, I've been encouraged to 'overstate' my income by a broker when looking at high income multiple mortgages - we didn't, I should add.

And I'm not suggesting that this is what the op had in mind.

But it is simply ridiculously naive to imagine that with house prices as they currently are, there aren't a hell of a lot of people out there lying on self-cert forms to get the mortgage they need. I know of too many cases, read about on here etc to believe otherwise. I'm not saying all brokers do it - I'm sure you lot don't, except in exceptional circumstances as explained by one of you above - but it is highly disingenious to pretend it does not go on. !!!!!!, Peter Mandelson, a government minister lied on his mortgage application form!

It's not caused any major headaches - yet - as house prices have continued rising and so few individuals or banks have been caught out by it so far. But look at what's happened in the US - once prices wobble, all these dodgy loans start to come out and the consequences may not be pretty.....

jamesd

carolt wrote: »

!!!!!!, ... , a government minister lied on his mortgage application form!

You may wish to review the report by Herbert Smith Solicitors who investigated the matter for the Britannia Building Society that "as a result of our investigation (...) we have concluded that ... did not have any dishonest intent at any relevant time and did not consciously mislead the Society" and the conclusion of the Select Committee on Standards and Privileges on the matter and recant, for they make it clear that your accusation is unfounded.

Dan_Collins_2

carolt wrote: »

Oh come on, I've been encouraged to 'overstate' my income by a broker when looking at high income multiple mortgages - we didn't, I should add.

And I'm not suggesting that this is what the op had in mind.

But it is simply ridiculously naive to imagine that with house prices as they currently are, there aren't a hell of a lot of people out there lying on self-cert forms to get the mortgage they need. I know of too many cases, read about on here etc to believe otherwise. I'm not saying all brokers do it - I'm sure you lot don't, except in exceptional circumstances as explained by one of you above - but it is highly disingenious to pretend it does not go on. !!!!!!, Peter Mandelson, a government minister lied on his mortgage application form!

It's not caused any major headaches - yet - as house prices have continued rising and so few individuals or banks have been caught out by it so far. But look at what's happened in the US - once prices wobble, all these dodgy loans start to come out and the consequences may not be pretty.....

This does happen, and will always happen while lenders allow self cert to continue. I agree in the early 00's self cert is a major reason house prices increase so much. This is not the point we are talking about. What i am saying is that true self cert does not require ANY proof of income, why self cert if you can show income other than speed of service in some cases!

Conrad

When I talk to advisers at conferances etc I always find most do not fully understand thier TCF responsibilities. Few realise that they accept finaicial liability for losses as a result of mis stated income or the advisers lack of due dilligence. HSBOS for example have just such a clause.

Many are'nt aware that some lenders such as N Rock spot cheack a proportion of cases AFTER legal completion and both broker and have signed clauses that allow such lenders to request full income proof at any time.

A classic I see all the time is where brokers sell protection policies such as critical illness cover that require income proof in the event of a claim (for example for permanent disability liabilities, or waiver of premium), yet at the same time they RECOMMEND a self cert mortgage is suitable as 'the client cant prove income'!!!!!!

Many brokers have not learned some very old lessons, but they will.......

merlinthehappypig

HairyHandofDartmoor wrote: »

The last three posts have lost me a bit I'm afraid I don't have any income other than that already mentioned.

Based on the replies on this thread, self certification may not be the best route for me. I was merely looking for flexibility. The best route may be to find a lender who will be willing to lend a multiple of 5 times our income.

When we are closer to wanting to move, I will use a broker to find out whether this option would be at all possible. A lot could change in a year!

Thanks for all your replies, everyone.:D

Like you, if I decide to buy shortly, I will want, and can afford, a higher repayment than my income might suggest. I will also be looking for a relatively small LTV, of around 30%. Another similarity is that I was also accused of working for the BBC when I had the temerity to suggest that I was having no difficulty, through registered brokers who have a number of offices, getting a loan at high street rates of 10-15x gross income.

Whilst I would not want to take on that type of debt, 6 or 7 times income is readily available at normal high street rates through subsidiaries of the major banks if you have an excellent credit record and a small LTV.

I can only assume that the brokers who help and advise on here worry more about their clients ability to pay than most. Not a bad thing, but not all people's circumstances are the same and a simple multiple of gross income does not treat everyone fairly. I have no other debts of any type and live fairly frugally so my disposable income is considerably higher than the norm.

My mortgage application requires no income declaration of any sort, just my assurance that I understand the repayments and can afford them. I have checked with my broker since the 'credit crunch' and nothing has changed.

No doubt I will be shot down in flames for suggesting this again, but it is the truth. If you wish to pm me I can give you the contact details for the broker I have been in touch with.

Dan_Collins_2

chriseast wrote: »

Like you, if I decide to buy shortly, I will want, and can afford, a higher repayment than my income might suggest. I will also be looking for a relatively small LTV, of around 30%. Another similarity is that I was also accused of working for the BBC when I had the temerity to suggest that I was having no difficulty, through registered brokers who have a number of offices, getting a loan at high street rates of 10-15x gross income.

Whilst I would not want to take on that type of debt, 6 or 7 times income is readily available at normal high street rates through subsidiaries of the major banks if you have an excellent credit record and a small LTV.

I can only assume that the brokers who help and advise on here worry more about their clients ability to pay than most. Not a bad thing, but not all people's circumstances are the same and a simple multiple of gross income does not treat everyone fairly. I have no other debts of any type and live fairly frugally so my disposable income is considerably higher than the norm.

My mortgage application requires no income declaration of any sort, just my assurance that I understand the repayments and can afford them. I have checked with my broker since the 'credit crunch' and nothing has changed.

No doubt I will be shot down in flames for suggesting this again, but it is the truth. If you wish to pm me I can give you the contact details for the broker I have been in touch with.

I remember I was joking about the BBC thing, I think it was me! Also what lender are you dealing with?

Dan_Collins_2

Conrad wrote: »

When I talk to advisers at conferances etc I always find most do not fully understand thier TCF responsibilities. Few realise that they accept finaicial liability for losses as a result of mis stated income or the advisers lack of due dilligence. HSBOS for example have just such a clause.

Many are'nt aware that some lenders such as N Rock spot cheack a proportion of cases AFTER legal completion and both broker and have signed clauses that allow such lenders to request full income proof at any time.

A classic I see all the time is where brokers sell protection policies such as critical illness cover that require income proof in the event of a claim (for example for permanent disability liabilities, or waiver of premium), yet at the same time they RECOMMEND a self cert mortgage is suitable as 'the client cant prove income'!!!!!!

Many brokers have not learned some very old lessons, but they will.......

We all know Conrad "the great" that we are open to these things. With or without clauses the adviser would lose everytime, thats how the FSA have set the rules. Blame the adviser! Lenders are to big to fight and cost to much, clients are clueless and brokers are like lions hunting the week! For crying out loud Conrad do you really believe your the only IFA to know these things. NR can and will check if they see fit, all lender hold the right to check before, after or during the application process! This is not new and was about before the TCF rules came about!

So you go to these conferences do you? I am do busy being available for my clients to take a day off for a jolly and free pens!

Sorry to rant but you wind me up Conrad!

Conrad

Dan I'm pleased to be of service.

Of course we should blame the adviser, you see he's an 'ADVISER' - he 'advises' lay people on whether they should or should not borrow. Therefore he is responsible for discharging this duty. Funny that.

A decent adviser will turn away as many people as he helps.

What irks me are beemer driving, thick, ignorant, slick salesmen poporting to be 'advisers'. The sort that would never listen to Radio 4, cause its borin in'it.