A self certification mortgage is an option for individuals who work from their home or are self employed. It is sometimes difficult for such people to prove their incomes, unlike those who receive regular pay cheques. Lenders have traditionally considered them a higher risk as their incomes are often quite variable over the year.
Just over ten years ago the self certification mortgage was released onto the mortgage market to help these individuals obtain a more affordable loan. Before a self certification mortgage was available such a borrower might only be able to obtain a mortgage at a higher than average rate. These mortgages are often offered by lenders that specialise in this field. There are usually specific conditions regarding a self certification mortgage; a self certification mortgage may well be a bit more expensive with a higher interest rate and thus the repayments each month will be higher. A self employed person is seen as more of a risk because there is always the potential of work drying up and income plummeting accordingly. Usually a self certification mortgage rate is about one percent higher than a regular fixed mortgage and can even be more than that.
When trying to work out if you can afford the piece of property you are interested in an online mortgage calculator can come in handy. A mortgage calculator allows you to input and change the variables of a potential mortgage.
At the present time (2nd quarter of 2008) it is more difficult to find many types of mortgages with some big lenders reducing their product range. You may well find that a search is required to find a lender prepared to consider a self certification mortgage.
