Self Certified Income

If you are interested in a self-certification mortgage the following will help you understand better how they work. The majority of residential mortgages taken out are those in which you prove income using wage slips, P60s, tax returns or business accounts.

However a high proportion are self-certification mortgages, where it is not necessary to prove your income in the traditional way.

There are many reasons why you might want a self-certification mortgage and these are a few:

• you are self-employed and do not have complete accounts
• you are both employed and self-employed
• you have two employed jobs and one job has a more variable income
• you have bonus, commission or overtime
• you have payments from a family member living with you
• You need a mortgage very quickly

In other words, a self-certification mortgage may accommodate a variety of different sources of income which combined, can be enough to cover the mortgage you want.

Taking out a mortgage is one of the most important things we do in our lives and these are a few of the things you should think about:

• As with any mortgage (whether self-certification or not) make sure you can afford to meet the mortgage payments now and in the future - remember your home maybe repossessed if you do not keep up the repayments on your mortgage.

• Self certification mortgages often require a larger deposit than ordinary mortgages, e.g. 10% or 15%. Make sure that you can afford the deposit.

• Although you do not need to prove your income, you will need to state it on the application form because the Lender expects it to conform with the normal income multiples, for example, if the lender's normal income multiples are 3 times single income OR 2.75 times joint income then a couple who calculate their income from all sources as £48,000 per year can borrow 2.75 x times £48,000 which is £132,000, or a single person who adds up their income from all sources as £41,000 per year could borrow 3 times £41,000 which is £123,000.

• Make sure you are realistic about stating your income and that it really does reflect your ability to pay the mortgage. REMEMBER, if you have the necessary income and can afford the deposit and mortgage repayments then a self-certification mortgage can help you to have the home you want even though you cannot prove your income - and as with any mortgage be sure you can continue to make the mortgage payments.

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