The Return of Self-certification?

Self-certification mortgages are hitting the headlines again, although this time no one can quite work out if it is for the right or wrong reasons.

According to some news reports, as many as 5,000 would-be homeowners, who are otherwise unable to prove their income in order to secure a mortgage from a mainstream lender, have expressed their interest in the self-certification mortgages since their launch on 18 January.

In fact, such was demand for the mortgages that the website offering them actually crashed, leaving visitors with only a message that it was unable to “satisfy demand for the vast majority of those that have already contacted us.” Similarly, the company’s phone lines became overwhelmed with the huge influx of calls. The company said that it would look to increase capacity in order to meet the massive demand.


Self-certification mortgages were seen by many as being emblematic of the financial crisis of 2008/9. Rather than subjecting borrowers to stringent checks, borrowers were simply able to claim that their income was at a much higher level than it was in reality – the practice led to a raft of otherwise avoidable repossessions.

Concerns over the veracity and viability of such mortgages led the Financial Conduct Authority to ban them; however, one company seems to have now found a legal loophole by establishing a lending company outside of the UK, and is even offering mortgages of up to half a million pounds provided that borrowers can lay down a deposit of 15%.

The company offering the product said that it “intend[s] to offer mortgages to other EU countries, so it won’t just be the UK”.

It remains to be seen whether the company is a credible entity and, even if it proves to be so, it could face swift action from regulators desperate not to see a return to the dangerous days of the self-certifying mortgage.

There are though, as evidenced by the high volume of enquiries received from the company, many who will be delighted at the prospect of self-certification. Mortgages are notoriously difficult to obtain for the self-employed, with yearly income often wildly variable, and self-certification would seem a reasonable option for such potential buyers. However, without full verification of income, some experts fear a return to the bad old days of similar to that of sub-prime lending.

Where to turn to for advice

There’s lots of very good advice available from the Money Advice Service if you are self-employed and considering a mortgage.

Another useful guide for self-employed mortgage seekers can be found at monesavingexpert.com by clicking here.

And to find out what it looks like when you apply directly to a lender check out this page.

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