What is a self-certification mortgage?

If you own your own business but have been in business for less than three years, you will need to get a self-certification mortgage. This means that you have to certify your income yourself, because you will not be able to provide the correct official documentation normally required with self-employed mortgages i.e. 3 years of certified accounts. Therefore you are declaring your income without the support of your accounts.

To get a self-certification mortgage you need to obtain an accountant's certificate, which is a signed document certifying your income. The mortgage provider may also request business bank statements over a set period of time as a second form of proof of your gross income.

If you already have a mortgage and want to switch, you will be able to prove your ability to pay using your current mortgage statements. If you are a tenant, you could ask your landlord to provide a reference showing that you always pay your rent on time.

In addition to the above, your mortgage lender will check your credit history and calculate a credit score relating to your current finances. If you have had problems paying back loans or credit cards in the past then you might need to get your self-certification mortgage from a sub-prime lender, which will inevitably mean higher interest rates.

Self-certification mortgages normally require you to pay a deposit of 25% at the outset.