Return to the Mortgage Glossary Home to view explanations for all mortgage terms. What follows is the definition for the term Self Certification as it relates to mortgages in the UK. Self CertificationA self-certification mortgage is a mortgage offered on the basis of you stating what your likely income will be, rather than providing documentary evidence. As such, they tend to be a mortgage product required by those who are self-employed or have erratic earnings. You may have to ask an accountant to back up your statement. If you have more than two - and, in many cases, three years' worth of accounts, then you should be able to just apply for a standard mortgage. Self-certification mortgages fit under the so-called non-standard banner and there are around 15 lenders in the market. The market is becoming more competitive and deals are therefore improving. You are still likely to pay more, but there should still be the opportunity to switch to a better rate - and, often, another lender - a few years down the line. You are asked to pay a higher rate because statistics show most businesses fail within the first two years of trading. And if you are left with heavy debt there is a possibility you could lose your home. However, some self-certification mortgages are better than others, and, if cash flow is a problem, it's worth checking out those that offer payment holidays and the facility to pay more when you can. It may well be worth seeing a broker, as they can explain any intricacies, but be sure it is a reputable firm and regulated under the mortgage code. Whereas standard mortgages typically offer a 95% loan to value, self-certification mortgages almost always require a higher deposit: a loan-to value of 90% and, more commonly, 75% is usually offered.
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