Self Certified Mortgages
Struggling to show suitable proof of income for your mortgage application? Here’s everything you need to know about self-cert mortgages and what the alternatives are.
In this article, we’ll confirm whether it’s still possible to get a self-certified mortgage, what the alternatives are, and where to find the expert support you’ll need for income that’s complex or hard to prove.
Are self-cert mortgages still available?
No, it’s no longer possible to self-certify for a mortgage in the UK. When they were available lenders would use higher rates in an attempt to offset the risk, but this wasn’t enough. As a result, the Financial Conduct Authority (FCA) banned self-certified mortgages back in 2009 during the wake of the financial crisis when introducing responsible lending guidelines.
How did they work?
This was a type of mortgage that became popular for a period of time as they offered applicants the ability to apply for a loan without providing proof of regular income.
Self-certification or ‘self-cert’ mortgages were most sought-after by people who were:
- Contractors and freelancers
- Company directors
- Applicants with complicated or ‘non-standard income’
Instead of having to show lenders documents proving income, applicants could self-certify themselves in order to obtain a mortgage. In practice, this made it much easier for people to qualify for a loan. But, it also meant an added risk that applicants would inflate or even make up their income for a self-certified mortgage.
Will they ever come back?
It’s highly unlikely. Self-cert mortgages are risky for both the borrower and the lender, which means it’s an unstable situation for the whole mortgage market. If you’re struggling to find the right proof of income then it may be worthwhile seeking the help of an experienced mortgage broker for advice on what solutions could be available.
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Alternatives to self-cert mortgages
Although self-assessment mortgages have been retired from the market, you may still need a more flexible lender or product type because perhaps you are:
- Self-employed with one year’s accounts, have bad credit, use a government scheme, or only have a small deposit.
- A limited company director with declared losses in the last three years, or declining profits.
- Generating income from a variety of areas or lacking complete paperwork.
Your exact situation will be unique and the best way to find the right solution is with the assistance of a skilled advisor.
They’ll be able to look at your circumstances and needs, and then consider alternatives to self-cert mortgages worth exploring such as:
- Using an asset-based mortgage – these are exclusively for high-net-worth individuals
- Showing evidence of a viable investment vehicle for a buy-to-let (BTL) mortgage.
- Looking into commercial mortgages if it’s appropriate because lenders aren’t regulated and can be more flexible.
- Remortgaging from an original self-cert mortgage to a new, more suitable product.
A guarantor mortgage if you have a close family member who would be prepared to support your application
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How a broker can help get a mortgage with limited proof of income
If you’re struggling to meet the proof of income requirements set out by some lenders, using an expert broker can be your best route to securing a competitive mortgage. An experienced broker will be able to look at your complete finances and income history, and then take a holistic approach to your mortgage needs.
This means they’ll find the best mortgage for your individual circumstances, without the need for any self-certification. Along with exploring all the potential possibilities, a specialist broker will also be able to help manage your application from start to finish, even assisting with evaluating your credit reports.
If you’d like to be introduced to a skilled broker, just make an enquiry. The brokers we work with are experts when it comes to securing mortgages for clients with complex income situations.
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Evidence of income lenders now accept for a mortgage
As long as you deal with the right lenders, there can be some flexibility within this part of the application.
But in most cases, these are the sorts of proof of earnings you’ll need to provide instead of self-certification:
- Payslips from your employer.
- 1-3 years of certified accounts.
- SA302 year-end tax return.
- Existing, past or upcoming contracts.
- Profit projections (if you have less than 3 years of accounts).
- Details of any dividend payments.
Ideally, gather as much evidence as you can relating to the ways you make money. When you present everything you have to your broker, they’ll be able to take a look at it all and then find you a top deal with the most suitable lender based on the income evidence you’re able to provide
Can you get a self-certified mortgage outside the UK?
Yes, there are some countries that have not banned self-cert mortgages or put in place proper regulations to prevent self-certification. However, the FCA strongly advises against pursuing these types of overseas mortgages because the lack of controls also means there’s no protection against bad mortgage advice, extortionate rates, and the mis-selling of products.
Speak with a broker about alternatives to self-cert mortgages
Although self-cert mortgages are a thing of the past, an experienced broker can still help you arrange a competitive loan no matter how complex your income situation is.
The brokers we work with have plenty of first-hand experience setting up mortgages for clients who are self-employed or draw income from a variety of sources. So you don’t have to feel like you’ve missed out on a risky self-certified mortgage.
Speak to an expert
Maximise your chance of approval with a specialist