2nd-Mortgage

The market for self certification mortgages is expanding rapidly along with the rest of the non-conforming lending market. This is mainly due to a rise in the number of self-employed people in the workforce. It is estimated that around one quarter of the workforce is now self-employed and the number is growing.

Such individuals usually earn enough money to apply for a mortgage, however many do not possess the strict accounting records required to apply through a mainstream lender who will require full proof of income. This is either because they have little need for preparing such accounts or their accounts show a smaller income than they actually make. This most common reason for this is that their incomes may be mitigated for taxation purposes.

The lender has stated that they are only removing their self-cert products from the market temporarily. The financier also states that another reason for the move is that they have been subjected to a sharp spike in the number of applications for their self certification mortgages. This means that they must reel back the product for a while so they don’t overexpose their loan book to a single product.

The brokers believe that the lenders need to take more responsibility for their lending criteria and stop passing the blame on to everyone else. Brokers argue that denying responsibility for fraud with self certification mortgages is similar to handing someone a loaded gun to rob a bank and then pretending it wasn’t their fault the bank was robbed. Because of the lax lending criteria regarding self-cert products they have been blamed by some analysts as one of the main contributing factors for the credit crunch. Whatever the case, the FSA has now heard first hand from industry insiders that self-certification mortgages need a shake-up.