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Bad Credit Self Certification Mortgages UK

By Edited May 11, 2015 0 0

Looking for bad credit self certification mortgages UK residents?  Well let’s talk a bit about what they are as well as the advantages and disadvantages of them first.

Self Certification mortgages in the UK are similar to what are called stated income mortgages in the US.  These types of mortgages allow the borrower to declare their own income without requiring proof to be provided.  This is advantageous in several situations. 

Many people who are self-employed do not have regular paychecks coming in every two weeks which can make qualifying for a traditional mortgage difficult.  Other situations would be someone who receives bonuses or commission rather than a regular paycheck, has multiple jobs, is a contractor, etc.

Traditional mortgages require a steady history of income that the lender’s use as one factor to determine how safe an individual is to lend to.  Without this steady stream these traditional mortgage lenders will not consider people in the situations outlined above. 

Traditionally, self certification mortgages have had a higher interest rate, making it more expensive for the borrower to purchase a home this way than through a traditional mortgage.  However, in recent years this gap has narrowed so that self certification mortgages are much more competitive than they used to be.  They have become somewhat harder to obtain, but can still be an option to consider when looking to buy a home.  It is always recommended to work with an experienced banker or mortgage broker when considering purchasing a home and have them go over all of the options with you.  You may discover that a self certification mortgage is in fact not the best way for you to go.

As self-employment has become more common, more traditional lenders are willing to work with these individuals as buyers, particularly if they look like a good borrower across the other factors that lenders consider such as total level of income, credit history, etc.

Even if some of these other factors aren’t the best there still may be options for owning your own home.  Don’t assume just because you’re self-employed or have bad credit that you’re stuck renting forever!  Do your homework, learn to ask the right questions and you may find that the dream of home ownership can still be a reality for you, even if you start off looking for bad credit self certification mortgages in the UK.

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