Get the Facts On Self Certified Mortgages

A self-certified mortgage is type of home mortgage loan that is usually secured by those that are either self-employed or their income comes from various sources. Typically speaking, self-certified mortgages are usually used for small businesses and self-employed people, though individuals that make a living based on commission or simply cannot provide the necessary documentation that the lenders will usually require, typically three years' worth of income evidence. Self-certified mortgages are a relatively new form of mortgage loans, only being established within the past ten years or so. One of the main differences regarding self-certification mortgages is that the borrower will declare how much money or income is being made in order for the lender levy a certain loan amount. Other types of loans will use annual income documentation, but a self-certified mortgage will use other sources to in order to provide for evidence of such income. This will usually consist of providing extensive records regarding banking activity and transactions. Another factor regarding self-certified mortgages to consider is the fact that these types of loans will usually carry much higher interest rates. Furthermore, borrowers using a self-certified mortgage may also be required to have to provide for a fairly large down payment, usually more than 70% of the value of the home or property. The reasons for this is due to the lender’s risk involved in providing for such a loan, and thus, in order ensure proper repayment, such considerations must be taken by financial institutions.