Self Cert Mortgages gone mad?

Cynical?

The cynics in the mortgage industry have been calling them ‘liar loans’, but for those who are self employed or have no actual documents to prove how much they earn, we will call them self certification mortgages.
As with standard mortgages, you fill in a form detailing how much you earn, but the difference being that you are not required to confirm how much you earn and the company providing you with the mortgage simply takes your word for gospel as far as how much you earn.

In the last decade self certification mortgages have become particularly popular, especially amongst people with ‘dodgy’ credit histories and this has in turn attracted the attention of the FSA.

Serious Failings

The US has been hit hard after sub-prime customers lied about their earnings in order to obtain self cert mortgages. Now the banks are in trouble and defaults have gone through the roof.

The FSA are now believed to have now found serious failings with the UK market, warning those brokers who are putting through ‘fraudulent’ self cert mortgages that they are being watched and monitored.

Back lash

With the credit crunch in full swing, self cert mortgages are being yanked from the market. According to reports there are now 186 self cert products on the market in comparison to last year when we have the choice of 1,704. The main reason for withdrawal of self cert products is that people who took them out last year can’t afford to pay them back and defaults are rising.

Bradford and Bingley are feeling it more than most on the high street and some £321 million of the self cert mortgages B&B committed to are now 3 months or more in arrears – this is up 37% from the end of 2007.

If you are looking for a self cert mortgage, then consider what you can afford and we will advise you on the best product for you budget.