Self-certification mortgages, commonly referred to as self-cert mortgages, were banned in the UK by the Financial Conduct Authority (FCA) in 2011.<\/p>
These mortgages allowed borrowers to specify how much they earned without providing documents as proof.<\/p>
However, the FCA ultimately ruled that these mortgages presented too much risk of borrowers falling into arrears.<\/p>
The only difference between a self-cert mortgage and a traditional mortgage is that the applicant doesn’t have to prove their income. Instead, lenders trust them to be honest about it.<\/p>
These mortgages were popular in the UK among the self-employed, freelancers and commission-earning applicants. However, they were abused by many applicants who ended up being granted mortgages that they couldn’t afford. This became such a common problem that self-cert mortgages were dubbed “liar loans” by the media.<\/p>
It is now compulsory for all mortgage applicants to provide evidence of their income, instead of self-certifying.<\/p><\/div><\/div><\/div>
In the UK you can no longer get self-certification mortgages as they’ve been banned, as they were thought to present too much risk to borrowers. However, due to a loophole they are still available to get from European lenders, although the FCA has issued a warning about doing this, so it’s not recommended.<\/p><\/div><\/div><\/div>