SimplyFinance - Self Cert Mortgage

Self Cert Mortgages Explained

2007-08-09T23:00:00Z

Self Cert Mortgages or self cert loans are loans that are actively transacted in the UK, and they can be availed of by individuals who cannot prove or justify their income to a mortgage lender. Some examples of individuals who qualify may include people who have no formal accounts or who have had their accounts done by a person who is not qualified or not licensed. A person who may not be working but has some buy to let properties may also avail of a self cert loan. Similarly, people who are self-employed or who earn their living on a the basis of commission may be considered for a self cert mortgage.

Although self cert mortgages were designed for those who are self-employed, those who are employed by companies can also avail of this option. Those applicants whose income is built up by huge commissions, bonuses, and other forms of allowances can obtain a full 100 percent loan from the lender. A lot of traditional mortgage brokers have taken a very cautious view on individuals who are self employed, as well as those others who cannot really confirm their income. They believe that bonuses and commissions may not be considered stable and cannot be used in computation for a loan.Self cert mortgage lenders look past these items by asking the potential borrower for a large deposit. This deposit is required since they do not force the borrower to prove their income, but it is used to reduce the perceived risk from a lenders standpoint. In the end, it is important that the borrower can afford to pay off the loan on an ongoing basis. On the other hand, the UK mortgage market is a unique kind of market as compared to other countries for there is no intervention of the state or state funded organizations and almost all borrowing is funded and handled by mutual organizations such as credit unions and building/construction companies, or proprietary lenders (normally banks).

The rise of the self cert mortgage loan and lenders surged up in 1982 when the UK mortgage market was deregulated and many lenders came up with many strategies employed to attract borrowers. The main and biggest advantage point of the self cert mortgage is that borrowers are not forced to prove their salaries, but the disadvantages are the high interest rates are higher as compared to normal mortgages and the loan to value ration is lower.Since lenders source their funds from deposits or money markets, mortgages use what is called a variable rate while lenders rely on a tracker rate or a standard variable rate. These rates are linked directly to the Bank of England repo rate. As such, they may make several offers to pull in new customers:

Fixed Rate : this is where the interest rate remains the same for a specific period, usually from 2-10 years. Longer fixed term rates are usually more expensive than the short termed ones.
Capped Rate : similar to the fixed rate wherein the interest rate cannot rise above the cap but can vary under the cap. Sometimes a minimum rate is required and this is called a collar. Capped rates are offered over 2, 3, 4, or 5 years.
Discount Rate : this is when there is a set amount or percentage of reduction in the standard variable rate for a specific period, usually 1 to 5 years.
Cash back mortgage : this occurs when a lump sum is provided, usually as a percentage to the amount of the loan.

UK lenders usually charge a valuation fee, which covers the cost for a surveyor to visit the property to inspect and ensure that its value is worth enough to cover the mortgage amount. Contrary to what most people think, this not a full pledged survey and may not be able to pinpoint all the defects and of the property or house. Moreover, it does not form any type of agreement between the surveyor and buyer. This means that the buyer cannot sue if the survey is not able to reveal any defects found on the property. However, the surveyor can carry out a building survey or what is called a "homebuyers survey" at the same time.

Self Cert mortgage is an alternative ideal for those individuals who cannot pass normal mortgage lending procedures, and it also offers relief for those who are regularly employed to take out a larger, if not almost full price for a mortgage.

If you're interested in finding out more about self cert mortgages, take a moment to fill out our simple questionnaire, and one of SimplyFinance's representatives will contact you to put you in touch with a self cert mortgage broker. This broker will answer any questions you may have about self cert mortgages, and they'll be able to search the market to find the best self cert mortgage deal for you.

CLICK HERE TO APPLY FOR A SELF CERT MORTGAGE TODAY!

The Effect of Self Cert Mortgages on the Housing Market

2007-08-10T07:00:00Z

With so many lending companies offering their services, it is important for the borrower to understand the pros and cons of obtaining a mortgage loan. Self cert mortgages are ideal for people who would want to take out a loan on nothing more than their claims that they can pay the loan back. Self cert mortgages are very much the rage in the UK where many individuals use them to line their pockets and become rich quickly, but this is at a cost to the housing sector.

In the United States, mortgage lenders are very strict that the amount they let out is small, and this leads to the cutting off lines of credit to the borrowers. Due to this, less people are buying houses or properties, and this may very well cause market prices to crash. In line with this matter, the US housing market is hurting because people with debt problems are trying to rid themselves of their properties quickly, and there is actually market for that since there are many people who are interested in purchasing the properties at a cheaper prices, and there is an immediate need for these properties to be sold.

The UK housing market suffers as well. When the US housing economy drops and dips, expect the UK market to do the same. Experts believe that if this happens, there would be a slight dip in the economy, but it would not end up in as large of a slump as the US market. They attribute this to the fact that the self cert mortgage market is deregulated, meaning that there is no state interference and to the fact that since the UK has a high population, people are really on the look out for homes, and this would help keep the prices up despite the economic drop.

Experts point out that the UK self cert mortgage market lenders have loosened their criteria for lending, but it is not like the US. Many people are able to borrow up to four or five times their income. Lenders offset this by asking the borrowers to pay a hefty deposit to counteract the negative effects. Experts follow the adage of “increasing supply plus lower demands mean falling prices.” As more people start mortgaging, house prices drop. If this keeps up, then the sector is in for an inevitable crash in the next few years. Of course, this could always change, but this is the trend seen as of now.

Many people would argue the point that US and UK markets have different criteria or point systems for self cert lending, but they are inevitably somehow dependent on each other. Another dark side to self cert mortgages is that the lenders, like banks, encourage people to lie about their income when applying. If a house or a property are used in the mortgage, they are padded up so that a larger amount can be taken out. Is there anything wrong with this process or policy? Well, the economy is certainly fooled into thinking that all properties are highly priced, but in reality, they aren’t. This could lead to repossessed properties being unsaleable because of their high prices. Imagine buying a Volkswagen then declaring its price to be that of a Ferrari. That is basically how the process goes.

With this, future buyers of properties are not sure if that is the actual value or if it the beefed up price designed to pay off the lender or defray additional costs. This type of belief tends to work against the housing sector since trust is thrown out the window, and people might not believe everything that is stated. This could be even worse for the housing and real estate sector. It's bad when debts rise and interest rates go through the roof, but for lying and back dealing to work into the picture makes it worse.

Interest rates would play the next deciding factor since the rates are always changing with the times, and lending institutions are always trying to find ways to make lending attractive to potential borrowers. Most people see this as a downside for the end user since it always comes out of their own pockets, and they see that most of their income goes to the interest rates.

In the general picture, self cert mortgages work well for those folks who need the cash, but once one starts padding the truth and the lenders themselves actually encourage it, everyone suffers and the country’s economy takes the brunt of it.

If you're interested in a self cert mortgage or if you've got more questions on the topic, take a moment to fill out this a short questionnaire, and one of SimplyFinance's representatives will contact you to introduce you to a self cert mortgage broker that will answer your questions and help you find the best self cert mortgage for your needs.

How to Find a Self Cert Mortgage

2007-08-09T23:00:00Z

Finding a self cert lender in the UK is not a difficult thing to do. With the deregulation of the mortgage market in 1982, the market expanded dramatically and many mortgage lenders and lending companies emerged to take advantage of the deregulation to attract potential customers.Self Cert lending is now a competitive business. Yet with the numerous opportunities, one still has to consider choosing the right self cert lender to approach. Many lenders have their own mortgage intermediaries that represent them or have independent intermediaries that do occasional work for them. Many may promise cheaper rates and easier financing, but other factors must be taken into account so that the process is done properly without hitches.There are a few things that a potential borrower has to look for in a self cert mortgage lender and its company:

Qualifications. Is the mortgage lender authorized by the FSA (Financial Services Authority) to give mortgage advice and to have authorized personnel that work under them? If they are not qualified, any borrower may suffer unexpected costs and damages, but they can complain to the company and seek just compensation.
Level of service. Every potential borrower needs to know up to what level of service the lender and its intermediaries can offer. Some only offer advice , some recommendations, some will even help you with your application from start to finish.
Charges. Intermediaries get paid either by charging you a fee or they will be paid by the procurer. You need to find out if any of these charges apply to you.
Interest Rate. Once a plan or package is decided, the intermediary should immediately inform you of any variable rates and when other payments should be made.
Early repayment charges. You need to find out if the lender will allow you to redeem your mortgage before it ending date. There are some self cert mortgage lenders that would not allow you to do so. You should also check the interest involved in an early repayment. More often that not, the interest charges are high.
Overpayments/Underpayments. Many mortgages offer the option for borrowers to make underpayments, overpayments and even take payment holidays. A payment holiday is quite useful if you think you are thinking of switching careers or if you take an extend leave from work. It is crucial that you find out about this option for it may help you make payments on time for this. You also need to find out if there any restrictions on by how much you can overpay your mortgage.

Take Out costs.

All mortgages come with fees involved, such as the payment of the intermediary for advice is involved. A mortgage-booking fee may have to also be paid, as well as administration or completion fees. Mortgage fees have been known to slowly increase over the years, and one can expect a cost of £800 in total. Some, but not all of these fees can be added to the mortgage to keep costs down, but this means paying additional interest on the fee. One also needs to be aware of exit fees as well. Exit fees are usually charged if one switches mortgages. These are important things to remember.

Other services.

Many lenders make it a point to takeout home insurance. As a condition to the mortgage, many lenders offer the borrower to choose the insurance agency, but sometimes the lender may be tied up with a specific one. You have to make sure that you get a good deal before you agree to take out the mortgage. Also make sure that you do not wind up with costly insurance just to have a cheaper rate on the mortgage. An intermediary will most likely try to sell life insurance, mortgage payment protection insurance (MPPI), and income protection insurance.Even if the intermediary is an independent for giving mortgage advice, they may be tied to a company that endorses and sells insurance products. The bottom line when finding the right self cert mortgage lender is to make sure that you are armed with all the necessary info when making the decision for in the long run, you, the borrower, are held liable for whatever you sign.

If you'd like more information on a self cert mortgage or if you'd like to speak with a self cert mortgage broker, take a moment to fill out this short questionnaire. Once you've done so, a SimplyFinance representative will contact you to introduce you to a self cert mortgage broker who will be bale to answer any additional questions you may have. They will also be able to search the self cert mortgage market to find the best self cert mortgage deal for you.

CLICK HERE TO APPLY FOR A SELF CERT MORTGAGE!

Tips for Finding a Self Cert Lender

2007-08-22T07:00:00Z

Do you need a self cert mortgage but you don't know how to find a self cert mortgage lender? Here are some tips to help you find the best self cert mortgage lender for you:

Ask around for lenders with good reputations. There have been cases of lenders who permit their borrowers to actually lie about their total income potential just so they can qualify for mortgages that would usually go to full-status borrowers. In the past, the income multiple rule was the basis for setting loan amounts, meaning you could only borrow an amount which was a multiple of your current income. However, with self cert mortgage lenders nowadays, it is possible to borrow much, much more than what your income would have dictated in the past, if you lie about what you really earn.
Refrain from pursuing loans with lenders who also tell you to change your job title so you can qualify for higher loan amounts. Some lenders, for instance, might tell you to put "Medical Staff" on the form rather than simply "Nursing Assistant" so that you can improve your loan ranking. There are reasons why lenders cap the amount you can borrow, and it's harmful to you and them if you take out a loan that is for more than you can handle.
Avoid lenders that convince you to over-borrow. No prudent lender would tell you to borrow more than what is in your power to repay. Over-borrowing is a good way to lose the roof over your head, and to leave you and your family homeless.
Don't be put off by lenders who do background checks (such as asking for information from your personal accountant). Lenders who do this show that they are cautious. This is a good sign because it means that they have a reputation in the industry to uphold, and they are not out to defraud their company or you. Submit to the background checks, if they are within reasonable bounds.
Apply for self cert mortgages from lenders who accommodate people with multiple sources of income, such as from freelancing gigs. These lenders may be more willing to grant you other loans in the future based on your ability to repay.
Borrow from lenders who lend a helping hand to people who are either self employed or have poor credit histories. Such lenders are simply being pragmatic because the mainstream market has already been saturated, and they need additional sources of income from their self cert mortgage products. Traditional lenders may perceive you as a huge risk if you are self employed or have poor credit.
Borrow from lenders who ask you for a percentage of the loan amount as deposit. Again, such lenders are practicing prudent lending policies when they initiate such a step.
Pursue self cert mortgages from lenders who provide a variety of mortgage packages to you. A self cert mortgage is similar to your typical mortgage in that it can be in capped rate, variable rate, or fixed rate format. Be sure to know all your options before you commit to a self cert mortgage.

Where should I go to find a lender?Just as many financial services institutions, many self cert mortgage lenders now operate via the internet as well. This makes borrowing more convenient, and it fast tracks the application period. However, you need to be cautious about borrowing from online self cert mortgage lenders since there may be lenders who are not legitimate operating online. Pay particular attention if you are asked to pay a deposit (amounting to a percentage of the loan amount you are applying for). Whenever money is charged from you, there is always an element of risk to you, so be careful.There are also traditional lenders who are also opting to enter the self cert mortgage market too (including banks). Usually, it is quite safe to do business with such lenders because they have already built a reputation in the financial service industry. They are making it easier to get mortgages via self cert mortgage products because it is getting harder to get traditional low-risk borrowers to take out loans, so lenders are venturing to lend to borrowers that are, traditionally, thought to be riskier.As with all financial transactions, you should be prudent and cautious, and you should only do business with trustworthy lenders. This should make your financial condition less burdensome to deal with.

If you'd like help finding the best self cert mortgage deal, take a minute to fill out this simple questionnaire, and one of SimplyFinance's representatives will contact you shortly to introduce you to a lender that will provide the best rate for you.