Self Cert Mortgages in 2011

Self cert mortgages in 2011 still exist, but not in the way they used to before 2011. A self certified mortgage is a way for freelancers, contractors or other self employed workers to prove their income and receive a mortgage. With normal jobs a mortgage lender can simply access someone's income and judge whether or not they are eligible for a mortgage; self employed individuals, however, must prove their income and claim whatever they make. As self employed payments can vary considerably it can be hard to prove an "annual" salary whilst taking into account business expenses.

If you want to apply for a self cert mortgage in 2011 you must provide at least two or three years of audited accounts for your business or income. If you previously qualified under a self cert mortgage you may find it difficult to transfer to an interest-only mortgage, or may not be able to move home at all under tough new regulations.

The FSA specifies that money can only be lent if the borrower can reasonably afford to pay the amount back monthly, which also applies to mortgages. For some business owners they have been running less than three years and may not be able to provide audited accounts, regardless if they can afford the mortgage or not. A lender won't consider the borrower if they can't provide three years of accounts, even if they earned a considerable amount in one year.

The original idea of a self certified mortgage was to prove your own income to the bank without wage slips. Now, however, self employed people must have their account audited and pay out expenses to do this, which does not guarantee acceptance on a mortgage anyway because of variables involved in self employed work. For example, annual income varies between whether the bank takes into account business expenses, overall net income or additional savings; a business could make over £50,000 in one year and save most of that in an account but only show £12,000 net income next year, but the bank will not take this into account.

To improve your chances of receiving a self cert mortgage in 2011 consider talking to a professional solicitor or financial advisor to guide you in the right direction.

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