Self-Cert Remortgage Fundamentals

A self cert or self certified mortgage addresses the needs of self-employed and freelance workers, enabling them to raise a loan or remortgage without having to prove their income. The onus is placed back upon the borrower who makes a declaration as to their earnings and no further checks are made. No supporting documentation is required to prove their circumstances, as their word is considered sufficient.

Editors Note: Self employed workers should note that it is not advisable to 'lie' about your income or your financial circumstances as it could get you in trouble with both the loan company and in extreme cases the law.

Self certified mortgages enable borrowers to draw up to £1million, from certain lenders, with a typical deposit of 10-15% of the property value; which once again varies from lender to lender. As the lender views the self-employed as higher risk i.e. possibility of late or non-payment the loan or remortgage carries a higher interest rate.

The basis of remortgage affordability is simple, before applying for a self-certification remortgage you should calculate your total household income, and make sure to include a partner's wage where relevant.

Once calculated your household income will guide you in how much you can afford to pay at each monthly instalment. Great care is required here as a calculated figure set too high is likely to overstretch your finances and you risk defaulting. An instalment figure, which is set too low, will result in the repayment of the mortgage taking much longer than necessary.

As with any other remortgage product self-certification remortgage come in various packages, some of which feature overpayment and underpayment facilities and payment holidays. Variable rate, Fixed rate and Capped rate products are all easily available given the number of new specialist lenders in the market place. Some of these lenders are already established high street names that have setup special divisions to handle these niche remortgages.

Each lender has its own validation/acceptance criteria and some may even seek to obtain credibility statements for the borrower. It is not unusual for accountant and banks to be contacted and if the lender has any doubt then proofs will be required.

As with any remortgage it is always advisable that you seek advice from professionals before you make any decision. When presented with the final paperwork make sure and be thorough in your checks before signing anything. Check the small print and be especially aware of early settlement charges that may prevent you from moving to another remortgage product in the future.

A self-certification remortgage transfers almost all of the decision making away from the lender and over to you, the borrower, as an individual. It is especially important that you consider your position very carefully and are not placing your wealth and your health at risk with a remortgage product that is inappropriate for your circumstances, financial or otherwise.

Andrea Simpson is an online remortgage expert who provides remortgage and self employed program advice.

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