2nd-Mortgage

Those who have a keen interest in the future of self certified mortgages may have noticed that they are beginning to appear more and more frequently in the media. Self certified mortgages – which enable the borrower to certify their income without needing to supply standard income documentation – may be extremely popular with the self employed but they are also a cause for concern for the regulatory bodies.

While lenders usually need proof of income, sometimes people may have difficulty proving how much income they make. Perhaps they are self-employed or have not been trading long enough to produce any accounts; maybe they have more than one job or rely on large bonuses or commissions as part of their total income. Contract workers, freelancers, unsalaried company directors, or low wage earners with higher assets would all have problems in providing income records. These people need to consider self certified mortgages.

If you have determined that self certified mortgages are the best choice for you, how do you avoid getting in over your head? The first step is to be brutally honest when reporting your income. Do not use numbers that are overly optimistic; if anything, choose numbers that are conservatively pessimistic. Never count on something that has not happened yet. If your bonus normally increases 2% each year, there is no reason to expect it to increase 10% this year.

If you have concerns about relying on a certain level of projected income, and then falling short, discuss it with your lender. Too many people attempting to secure self-certified loans mistakenly believe they must bluff their lender by misstating the facts, and this is not true. In fact, the lender is your ally. They want to lend you money because in the end that is how they make their money. They simply do not want to foreclose on you. If there is a reason for concern, they want to know. They have more experience with loans than you do, so discuss your concerns with them and take their feedback into consideration.