Self-cert’ mortgages constantly disappear from the property market

Self-certification mortgages, which do not require proof of a borrower’s earnings, have almost vanished from the market as banks no longer want to lend to customers who have no regular or reliable salaries.

Brokers report that just two providers are still offering these types of loans - The Mortgage Works, the specialist lending arm of Nationwide, and Platform, a division of Brittania. BM Solutions and Bank of Scotland, the HBOS brands that are now part of the Lloyds Banking Group, withdrew form the market last month.

Self-certification mortgages had been popular with self-employed people whose income may fluctuate. They also provided a way for employed people with additional income to make sure their total earnings were taken into account when applying for a loan.

Self-certification mortgages allow borrowers to declare their annual earnings without having to back them up formally with accounts. Lenders would still make credit checks on these customers and would typically ask for details of their accountants, but would not ask for further evidence of their income.

Banks have since pulled away from these mortgages as it became clear that some borrowers were inflating their income in order to take out larger loans. They fear that these borrowers may now struggle to keep up their repayments.