Borrowers warned to avoid overseas self-cert mortgages

February 6, 2016 by Brendan O'Neill

Lenders

The Financial Conduct Authority has warned that those who take out a self-certification mortgage from a company outside the UK will not be protected by UK regulations should anything go wrong.

A new lender, known as Selfcert.co.uk, has set up a company in the Czech Republic, and is offering self-certificated mortgages to self-employed people for amounts up to £500,000. The minimum deposit required is 15% and interest rates are charged at 2% above the base rate.

The new company, which set up on 18th January, has had a lot of interest from self-employed people in the UK looking for a mortgage. However, the company has now stopped lending to new clients whilst it deals with a “severe backlog” of people who have registered an interest with them.

Self-cert mortgages were banned by the FCA back in 2014, as they made it possible for people to borrow far more than they could realistically afford. However, the Prague-based company states that they are not operating in the UK and are therefore not regulated by the FCA.

The business has said that it will be able to provide mortgages for 250-300 borrowers, although it is limited to a total lending of £50m. Lenders in the UK now have to conduct strict affordability checks, which can cause problems in some cases.

Mortgage advisers are required to undertake CeMAP training in Manchester and other cities in the UK, so that they can offer advice and guidance to borrowers who are experiencing difficulty.