self cert mortgage

The UK mortgage market has bloomed in the last decade to become one of the worlds most complex and all-encompassing loan markets. And it has done this by being innovative – lenders have asked UK borrowers what they want from a mortgage, and how they want their mortgage to work. Millions of Brits told lenders that they have trouble proving their income so as to gain a mortgage – they are ‘non status’: their financial status cannot be wholly defined. So lenders created the non status mortgage for these people. A non status mortgage is one that does not need proof of a set income – a special mortgage for a special borrower.

So how does a non status mortgage work? What does it offer that a prime, basic mortgage does not? Well, it doesn’t offer too much more really, it just allows those who have no set fixed income stream to be accepted for a loan. A non status mortgage has the same sort of service, the same potentials and the same demands of most mortgages.

Maybe the borrower has his or her own business and cannot offer a fixed income as proof, or maybe the borrower is a freelancer and lives from job to job. Maybe the person in question will have to rely on bonuses or performance related commission to be able to afford to pay back a mortgage each month. For all the borrowers in these ever-changing situations, and more, a non status mortgage could help them finance a home.

Some lenders, especially in this time of heightened financial instability, are not keen on lending a non status mortgage. Some lenders say it complicates things and it makes it difficult for them to risk a lot of money on an uncertain borrower. What it the non status borrower make no money in the month? What if their business doesn’t succeed? What if they don’t reach their targets and fail to pay back the non status mortgage? These are reasonable concerns, but they are concerns of lenders who like to play it safe.

But there are plenty of non status mortgage providers out there who are willing to take risks on borrowers who cannot prove their income because just because there isn’t a PAYE at the end of the month doesn’t mean there isn’t a lot of money rolling in.

Non status mortgage lenders will look at past histories to determine how good you have been with debt. They will look to credit scores to see if you are a sensible borrower and they will look at you as a whole person, not just a pay cheque. A non status mortgage is one that takes some careful consideration, on the part of the lender as well as the borrower.

This heightened risk means non status mortgage lenders will tend to demand a higher down-payment, a higher monthly rate and squeaky clean credit. And because belts are being tightened, non status mortgage deals are becoming more scarce – but things aren’t as bleak as the spellers of doom would like us to think. If you think you can afford a mortgage with the money you are bringing in, talk to an adviser and see if you could benefit for a non status mortgage. Just because you cannot prove your income, doesn’t mean you do not deserve a mortgage.

Just because you cannot prove your income doesn’t mean you do not deserve the choice that other Brits have when looking for a mortgage. There are up to 12 million* people in UK who could be deemed ‘non status’ – their income cannot be proved and they cannot be given a status. As a result the self cert market has grown and there is a lot of choice out there when it comes to searching for a no proof of income mortgage. But what to choose? What type of no proof of income mortgage will be the best option for you?

A fixed rate is the most common no proof of income mortgage. It is a set headline rate for two, three, five or even ten years. Many non status borrowers choose this option as it means their mortgage has stability – lots of people who are self certified have enough ups and downs in the financial life, they don’t need their mortgage changing too. Of course, there are limitations to a fixed rate no proof of income mortgage – but if you want to be sure of your monthly payments then a fixed rate could be for you.

If you think that a fixed rate may be too constricting, then maybe a tracker no proof of income mortgage would be the better choice. A tracker is dictated by the Bank of England’s base rate – if it drops, so does your mortgage rate, but if it rises, then your rate rises with it. Recently the base rate has dipped to 5%, a historically low level for the UK, but there is no guarantee that that will not rise again towards 6% or even 7% in the next few years – but then no one can say it will not dip towards 4% in the near future either. A tracker no proof of income mortgage could possibly help you reap the rewards of the fluctuating UK economy, but it can also end up costing you more in the long run.

If you own your own business, or are just a prudent saver, then maybe you have money or other collateral tucked away – this nest egg can be used to get you a cheaper monthly rate in conjunction with an offset no proof of income mortgage. An offset deal means any equity you have – savings or investments or even physical collateral – can reduce your mortgage repayments if they are incorporated into an offset mortgage account. For example, if you have £20,000, then that can be offset against a £100,000 mortgage so as you only have to repay £80,000 of mortgage. The money sits in an account, so can be taken out at any time – it just the less you have offset, the more you have to pay at the end of the month. An offset no proof of income mortgage can be a great money saver – if you have the money to spare, that is.

Whatever you choose you must think carefully. Talk to an adviser and take stock – know what you can afford and do not over stretch yourself. A no proof of income mortgage can be a great tool to help those who cannot prove their wage, but the wrong no proof of income mortgage can be an unnecessary burden. So take your time and choose carefully.