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Borrow More with Self Cert Mortgage?

By: Emma Eilbeck BA (hons) - Updated: 21 Sep 2012 | comments*Discuss
Mortgage Self-cert Borrow Money Lender

There is some truth in the statement that a self-cert mortgage will allow you to borrow more money, but this is not a good reason for taking one out.Typically a lender will be willing to lend you less money on a self-cert option, depending on how much you earn, this is because you are viewed as being more risky, as you may not make the same amount of money one year as you did the last. However, if you are able to show the lender that you have a good track record of paying your mortgage then they may be willing to lend you more.

A self-cert mortgage means that you are the one that claims how much you make, so there is an element of it that comes down to yourself. Obviously if you are an electrician and you are claiming that you make £200,000 a year, then a lender will not put the mortgage through, as it is very unlikely you are being honest about your wage, your lender may also do some checks if they think that you are overestimating how much you earn, or just refuse you the mortgage. Claiming how much you earn shouldn’t be a tricky business, especially if you are self-employed, as you will have receipts for tax purposes, so there shouldn’t be any risk of you increasing you income.

It is true that you can borrow more in the sense that a person on a £20,000 a year job who earns maybe £30,000 in bonuses will be able to use those bonuses to gain a better mortgage, whereas in the past it would have been only the basic wage that was taken into account. Similarly, if you work in a shop by day, but have an extra job at night, such as a taxi driver, then you would only be able to use the income form one of these jobs if you were not taking the self-cert option, instead self-cert will allow you to take both earnings into account.

Income from Other Areas

Self-cert mortgages will allow you to take in extra income from almost any other area of business that you have, and in some cases rent that you are receiving from a lodger. It may take some negotiations, but if you are self-employed, a lender may also look at where you are getting other income from, for example you may have a lodger that is paying you rent, or you may have a large savings account somewhere that you pay yourself a monthly income out of each month. These are things however that the lender would have to decide on an individual basis, and they would have to be confident in your ability to be able to pay back the mortgage.

When it comes to self-cert mortgages, don’t fall into the trap of thinking that this type of mortgage will let you borrow more, it will in theory, but you have to have the extra money there to start with, so don’t be tempted to think you have when you don’t.

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