This is where you are unable to "prove" your income and a Lender allows you to "Self Certify" this by signing a declaration to say that the income you are declaring on the application form is a "true statement of your income".
This means that you should not be required to provide "evidence" of your income.
Although most "Self Certification" Lenders restrict loans to 85% some Lenders are now prepared to lend up to 90% of the purchase price, particularly for self employed applicants.
It is very important to understand that the Lender will expect your "declared income" to meet their normal income requirements .
These income requirements vary from Lender to Lender but typical income multiples may be 3.5 times the principal income plus 1 times the secondary income.
Alternatively a joint income multiple may be 2.75 times both incomes added together.
Some Lenders use lower income multiples and some greater.
Any other commitments such as credit cards, other loans and maintenance payments will usually be deducted from your declared income before any income multiples are calculated to find out how much you can borrow.
These commitments are annualised before deduction. Usually your credit card will be charged at 5% of the current balance, times 12 months, to obtain the deduction.
Loans are calculated at the pay rate i.e. £100 per month will equate to £1200, this figure will be deducted from your income before the income calculation takes place.
If commitments are being paid off at mortgage completion Lenders will disregard these.
Although Self Certification Lenders usually do not require evidence of the income declared, many may wish to ring your accountant/employer to confirm that you are self employed/employed and that you have been trading/employed for the required period of time- usually 12 months.
All Lenders reserve the right to apply a "reasonability" test on your declared income. In other words, is the income you are declaring "reasonable" for the business/job you are undertaking?
Most Lenders use some kind of "credit scoring" system and something as simple as missed credit card payments can affect your ability to obtain a mortgage
There are various degrees of poor credit, from the simple missed credit card payments, through to someone not paying their personal loans or rent.
County Court Judgements (CCJ's) and defaults are also a major issue for most Lenders and clearly if you have previously been bankrupt or have entered into an agreement with your creditor, perhaps through a formal Individual Voluntary Arrangement' (IVA) this will badly affect your credit rating.
Most High Street lenders may not consider you for a mortgage we have Lenders who will.
If you have a Poor Credit History Self Certification is harder to obtain but is still possible in most cases.
Don't worry, whatever your circumstances, we should be able to find you a mortgage even if you have missed rent payments or even mortgage payments with your current lender.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE