The end of the self certification mortgage is nigh

Next week, the Financial Services Authority (FSA) is expected to produce its mortgage market review and experts predict this will include the end of the self certification mortgage as all borrowers will be required to provide proof of income.

This would spell the end for self certification mortgages; these are mortgages that allowed people to apply for a mortgage without necessarily having the paperwork to back up their income claim.

Originally the self certification mortgage had the admirable aim of helping those whose situation made it difficult due to fluctuating income, such as contractors, self employed people or freelancers, but they were open to abuse and many borrowers took advantage of this to inflate their incomes for larger loans.  Many of these borrowers are now facing difficulties in making their mortgage payments and at worst, repossession.

The FSA may decide that this was a key factor in contributing to irresponsible lending and so self cert mortgages may form a huge part of the review and subsequent proposals regarding home loans.

What will no doubt follow will be a debate about how then to help those whose income does not conform to the usual pattern gain a mortgage.



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