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Self-Certification:

Employed people have no problems establishing their true earnings but if you are self employed, a company director or contractor, freelancer, seasonal worker and those who have travelled and worked abroad for some time it's often a different story.  There are also many people employed on a non-standard basis who will struggle to get a mortgage. Their income may consist of mainly overtime or bonuses. Others work on short-term contracts or have more than one job.

The conventional lender's procedure is to required three years' audited accounts. The problem with this is the self-employed or non-standard employee's accounts may or may not have been prepared by an accountant and may not be available when required. Even when they are, prepared accounts tend to minimise a firm's profits, within legal bounds, so they don't necessarily present the best possible case in terms of net profits for a loan application.

However, with the self-certification process, brought in around 10 years ago, some lenders will allow those borrowers unable to prove their earnings but prepared to use a larger deposit, to certify their own income. Some lenders will do this with deposits as low as 15% and in effect it means the lender will take the borrower's word for their earnings instead of requiring audited and certified accounts, an accountant's letter, or in-depth scrutiny of the individual's financial affairs.

Self certification is increasingly supported by mainstream lenders, as well as specialist lenders. We can advise on your special circumstances and provide you with access to the right mortgage, selecting from many leading high street lenders and specialist lenders that you wouldn't normally have access to. 

Of course, although brokers should help clients present the best possible case for a mortgage loan, up to the limit of true earnings, there's no point in using self-certification to inflate earnings just to obtain a mortgage. It's not in a brokers interest to encourage this and this report from the FSA shows that, with a few exceptions, this does not happen in practice.

Information here is general only & believed to be correct, though we cannot guarantee it, nor do we accept any liability if you act or fail to act on this information. Always seek professional advice before making decisions. Investments can go down in value as well as up over  time.