What is a Self Certification Mortgage?

Self certification mortgage is a type of home loan specifically designed for individuals who do not have verifiable income sources. With this mortgage, the applicant declares the amount of money that they earn from their employment, business or other income-generating activities.

Persons Eligible for Self Certification Mortgage

This type of home loan, which is more commonly known as self cert mortgage, is ideal for self-employed individuals who cannot provide the three-year proof of income that most lenders require in ordinary mortgage applications. More often than not, self-employed individuals or owners of small businesses opt to get self certification home loans because these do not require audited financial statements. Individuals who have multiple jobs, contractual or temporary employment status can also apply for self cert mortgages.

Difference of Self Certification Mortgage from Other Types of Home Loans

When compared to ordinary home loans, the primary difference of a self cert mortgage is its high deposit requirement. It is very common for lenders to require a borrower of a self cert home loan to provide at least 70% of the total purchase price of the property being bought. Thus, if you are planning to buy a home using this kind of mortgage, you must have enough money to cover the required amount of deposit in your account.

On top of the deposit requirements, self cert mortgages also have a higher interest rate compared to ordinary home loans. This is due to the fact that lenders look at self cert mortgages as very risky. The proof of income is required by lenders to make sure that the borrower will be able to afford the monthly loan payments throughout the loan term. Without proof of income, which is the case in self cert loans, there is really no way for banks or other loan providers to ascertain if the amount of income declared by the borrower is true.

Things to Remember When Applying for a Self Certification Mortgage


Before you even think of applying for a self cert home loan, you need to have adequate amount of money to use as down payment. Lenders require at least 30 to 50 percent down payment. It is also very important that you do your research and shop around in order to get the best self certification home loan. Studying offers from different lenders will help you find the loan that can provide you with the terms ideal to your situation.

In order for your loan to be approved easily, you have to make all requirements available before you file your application. Even if you do not have proof of income, you can show bank statements that can help convince the lender that you are indeed capable of paying off your loan.

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