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Self certified mortgages

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 21, 2023

Self-cert mortgages – What are they, and how do you get one?

People who couldn’t prove income to qualify for a mortgage application had before the financial crisis of 2007/08 a tendency to use a controversial form called “self-certification mortgages”, which was a form of borrowing that is often not approved by lenders.

These products are no longer available in the UK, but those who cannot traditionally prove their earnings may be able to find other viable options.

We explain the history of self-certified mortgages and outline the best options. We advise where to go if you have limited or no proof of income.

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What is a self-certification mortgage?

These mortgages were self-certified and were intended for people who could not provide proof of regular income.

They were trendy in the UK with self-employed professionals, such as contractors, freelancers, and directors of companies, who have a non-standard income.

These were often the only way that people could be approved for mortgages. Start your self cert mortgage application below:

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What is the secret to their success?

Self-cert mortgages don’t require formal proof of income, and almost all applicants are accepted.

Non-traditional income borrowers could declare their earnings on a mortgage application without having to provide any evidence.

While they would rely on the customer to prove the loan was affordable, mortgage lenders will charge higher rates to protect themselves from the additional risk.

The lack of regulation in this market caused all sorts of dubious practices. The Financial Conduct Authority (FCA) eventually cracked down on self-certification mortgages.

Are self-cert mortgages still available?

They are no longer offered in the UK.

This marked lack of regulation led to unaffordable mortgages and unethical lending practices.

In 2009, the FCA prohibited self-certification of mortgages and introduced its Responsible Loan Guidelines. These regulations required that all mortgage lenders validate the income of all applicants.

Every lender must conduct a creditworthiness evaluation of any customer…

  1. A regulated credit agreement
  2. A regulated credit agreement significantly increases the credit amount
  3. A significant increase in credit limit for running-account credits under a regulated Credit Agreement

These guidelines prohibit self-certified mortgages from being legally available from UK lenders. They have been illegally unavailable for over a decade. Customers with low incomes or complex financial situations have options. They are entirely legal and available.

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What are the best options for self-certified mortgages?

Self-certification mortgages are no longer available in the UK. However, there are mortgage brokers that specialise in self-employed customers. They also offer flexible mortgage lenders that understand the needs of these traders.

Some lenders offer self-employed mortgages to help non-traditionally-employed individuals climb the property ladder.

  • Individuals who are self-employed with only one year of accounts
  • In the last three years, suffered a financial loss
  • Profits are falling in an accelerating trend
  • Limited company lending based on net/retained profits not drawn
  • Limited company lending is based on salary plus dividends
  • Self-employed with poor credit
  • Self-employed with Help to Purchase or with just a small deposit

The flexible mortgages offered by self-employed lenders are the closest to self-certification mortgages. However, they would be an excellent alternative to it even if they were not. Because they are less risky for both the borrower and the lender, have lower interest rates, and are fully regulated,

It can be challenging to find a niche lender, but we are here to help. Every day, we work with mortgage brokers to help self-employed customers with limited proof of income or complicated income obtain a mortgage. They are familiar with the best lenders and can help you find them.

Send us an enquiry, and we will match you with a broker who can help you find the right lender. Your credit score will not be affected, and you won’t have to pay any fees. We have a few mortgage providers lending, so we will be sure to help you.

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Alternatives to a self-cert buy-to-let mortgage.

Although self-certification buy-to-let (BTL) mortgages are no longer available in the UK, potential landlords who cannot prove their income may still be able to do so.

Some buy-to-let mortgage providers will not ask for proof of payment if they feel the investment is feasible.

These lenders don’t require a minimum income and base their lending decisions on the property’s rental potential.

However, this does not apply to all mortgage lenders who buy to let.

Some won’t lend money to people earning less than £25,000.

They will require applicants to prove their income in the usual way.

If you want to invest in property but can’t prove income, your best option is to work with a BTL broker.

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Alternatives to a self-certified commercial mortgage

Lenders can be more flexible because commercial mortgages do not have to be regulated by the FCA. Although self-certification of commercial mortgages is not available, business mortgage providers can be more flexible regarding customers looking for viable property investments but cannot prove their income.

A company’s operating performance often determines the affordability of a commercial mortgage.

The lender will evaluate this by looking at their earnings before interest tax, depreciation, amortisation (EBITDA) and other factors.

There are many commercial mortgage lenders available. Because they evaluate each case individually, you may have options through a broker if your income is insufficient to prove that you have made a good investment.

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Can I remortgage my self-cert mortgage?

You might be able to remortgage your self-certified mortgage if you did so before they were banned.

Many people who took out self-certification mortgages before 2009 are now looking to refinance their loans to get a better deal.

You need to switch to another product type to renew your self-cert mortgage. Also, you will only be eligible to remortgage once you have met the lender’s affordability and eligibility criteria. This includes income proof.

You might have changed your financial situation since you took out the original mortgage. If this is the case, a broker can help you determine what options are available to you.

Talk to an advisor about self-certification mortgage options

A self-cert mortgage is not the best option if you cannot show income the traditional way.

Despite the high rates being high and lending often reckless, there are legitimate alternatives to self-certification today.

To fill the gap left by the end of self-certified mortgages and to provide a better service, mortgage brokers have emerged that specialise in working with customers with complex incomes and employment situations.

If you are looking for a mortgage without proof of income or with limited proof, the best option is to hire the right advisor.

We can help. Our free broker-matching service will match you with the right advisor to get you the best self-cert mortgage.

The right broker can increase your chances of getting a mortgage. This applies to anyone looking for a buy-to-let with low-income or self-employed accounts.

We’ll arrange a no-obligation consultation with a broker to help you find the best self-certification option for your mortgage today.


FAQs on self certified mortgages

Is it possible for self-certified mortgages to be reintroduced?

It is unlikely that self-cert mortgages will be available in the same form as before. They were taken out of the market for good reasons. The new lending criteria and flexible lenders that have replaced them are much better alternatives.

Although new self-cert mortgages are not expected to be available in the UK anytime soon, flexible mortgage products that target customers with complicated incomes are constantly being developed.

Is there a self-cert mortgage that is interest-only?

No longer. The new FCA regulations allowed self-certification of interest-only mortgages. To get an interest-only mortgage, you must provide proof of income and a repayment plan.

However, brokers specialising in interest-only mortgages may be able to negotiate flexible deals for customers who otherwise might not be eligible.

To learn more, take a look at the guide to interest-only mortgages.

Can I obtain a self-certified mortgage from abroad?

While self-cert is not prohibited in other countries like the UK, the FCA strongly recommends that you do not apply for these products with an international lender. This is due to the lack of protection that customers would have against bad advice.

It is safer to speak to a mortgage broker specialising in complex income customers rather than resort to borrowing abroad.

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