Self Certification Mortgages and Remortgages

Self-Certification Mortgages (sometimes known as a non status mortgage) are for people who are unable to prove some or all of their income – this applies to the self employed, people on short-term contracts or small company directors who cannot provide three years of accounts.

Most lenders require you show a full set of accounts or Inland Revenue tax statements of accounts for the last three years to prove your income. To get around this obstacle many lenders offer self-certification remortgages.

A self-cert remortgage allows you to declare your income without having to provide proof of earnings or accounts. Different lenders require different information, such as solely running a credit check upon you, whilst others may require references from your bank, accountant or landlord.

Increasingly lenders will require you to sign an "affordability declaration" which contains your ability to pay the remortgage repayments.

Pros
A self-certification mortgage provides a way for self-employed people and those on short term contracts to get a mortgage.
It’s possible to get fixed or discount deals and some come with flexible features.

Cons
You will need a substantial deposit – while some lenders will lend up to 90 per cent of the property’s value, it’s more common for lenders to lend up to a maximum of 75, 80 or 85 per cent property’s value.
Some lenders will charge you extra interest on top of the rate available to their other customers if you take out a mortgage on a self-cert basis.
You must be careful not to overstate your income. If you overstretch yourself and become unable to afford your mortgage repayments, you risk losing your home. The formal Financial Services Authority statement is clear: Your home may be possessed if you do not keep up payments on your mortgage.