Self-Certification Made Easy

Article excerpt

More than 300,000 people start their own businesses each year ( and with every penny important in the early years, they need the best possible mortgage deal when they buy a home.

Self-employed workers buy homes with self-certification mortgages ( which originally obliged lenders to accept the borrower's estimate of income when approving a loan.

In October 2003, BBC2's Money Programme suggested the sector was set for trouble, because of "irresponsible" lending to applicants who had supplied misleading information on their financial situation.

But doomsters seem to have got this call wrong ( so far. This month's issue of Moneyfacts magazine claims self-certification lending is now "an acceptable, if not mainstream way of buying property" ( and growing fast, with 8.5 million self-employed in a working population of nearly 28 million. However, leading mortgage broker Charcol fears self-employed workers might still waste money ( by failing to remortgage to cheaper deals which have emerged as lending systems in the sector have been streamlined.

Some self-certified mortgage borrowers, says Charcol, could be paying nearly 7pc on Standard Variable Rate (SVR) ( as opposed to less than 5pc on new loans if they can accept a modest Loan To Value (LTV) ratio as the limit on their advance. …