May 2007, and interest rates went up again. BANG, more cost to homeowners on variable type mortgages. The cost of borrowing has risen 4 times in nine months.
Our first thoughts are usually towards first time buyers, struggling to reconcile the difference between today’s salaries and today’s cost of living. And rightly so.
But what about the hundreds of thousands of self employed people in the UK, with more joining everyday with the attraction of working for themselves and getting out of the rat race. What price do they pay for that freedom?
Self-Certificated mortgages are more popular today than they were 10 years ago, as it seems an easy route to get funds for your next home. But using this type of mortgage is not right for everybody. The reality is that many people do not understand what a Self Cert mortgage should be used for and why. A Self Cert Mortgage is for people who have multiple income streams or have difficulty in proving their income. For this they pay a premium. The interest rate available will be slightly more than standard mainstream mortgages for someone with a similar credit score. So why take that route?
For a mortgage provider to advance funds they need to know what your income is.
It is usual for them to ask applicants to provide wage slips, a P60, Bank statements and so on to verify their income. If you can do this, and you fit that lender’s criteria, you could be on your way to a new home… Great! If you can’t do this, you may need to consider the Self-Cert option. To Self Cert is to make a declaration of affordability; although you cannot prove your income, you know you can afford the repayments on the loan. For this type of mortgage you will pay a higher price than for the equivalent mortgage for an employed person.
The question to consider might therefore be, do you have to take the Self-Cert option? You may have had to take out a Self-Cert mortgage in the past, but don’t just assume that you won’t get a mainstream mortgage now. For instance most mortgage providers will advance a mortgage on a mainstream deal if you have accounts for the last three years or more that demonstrate the required level of affordability. Also, there are lenders who will accept other forms of evidence in support of an application; so it is well worth contacting a mortgage adviser who can guide you through the process.
The mortgage market is more diverse than it ever has been and the constant change of products makes it a minefield for those who do not understand the market or follow its changes. But then for most people, changing mortgages is not something they do on a regular basis so they don’t invest time keeping abreast of the market. This is understandable; however it can lead to wrong choices when a decision is made on a mortgage without taking advice.
Our first thoughts are usually towards first time buyers, struggling to reconcile the difference between today’s salaries and today’s cost of living. And rightly so.
But what about the hundreds of thousands of self employed people in the UK, with more joining everyday with the attraction of working for themselves and getting out of the rat race. What price do they pay for that freedom?
Self-Certificated mortgages are more popular today than they were 10 years ago, as it seems an easy route to get funds for your next home. But using this type of mortgage is not right for everybody. The reality is that many people do not understand what a Self Cert mortgage should be used for and why. A Self Cert Mortgage is for people who have multiple income streams or have difficulty in proving their income. For this they pay a premium. The interest rate available will be slightly more than standard mainstream mortgages for someone with a similar credit score. So why take that route?
For a mortgage provider to advance funds they need to know what your income is.
It is usual for them to ask applicants to provide wage slips, a P60, Bank statements and so on to verify their income. If you can do this, and you fit that lender’s criteria, you could be on your way to a new home… Great! If you can’t do this, you may need to consider the Self-Cert option. To Self Cert is to make a declaration of affordability; although you cannot prove your income, you know you can afford the repayments on the loan. For this type of mortgage you will pay a higher price than for the equivalent mortgage for an employed person.
The question to consider might therefore be, do you have to take the Self-Cert option? You may have had to take out a Self-Cert mortgage in the past, but don’t just assume that you won’t get a mainstream mortgage now. For instance most mortgage providers will advance a mortgage on a mainstream deal if you have accounts for the last three years or more that demonstrate the required level of affordability. Also, there are lenders who will accept other forms of evidence in support of an application; so it is well worth contacting a mortgage adviser who can guide you through the process.
The mortgage market is more diverse than it ever has been and the constant change of products makes it a minefield for those who do not understand the market or follow its changes. But then for most people, changing mortgages is not something they do on a regular basis so they don’t invest time keeping abreast of the market. This is understandable; however it can lead to wrong choices when a decision is made on a mortgage without taking advice.
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