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Self-certification mortgages to be banned
Thursday, 15 October 2009 Writes Hazel Cottrell hazel.cottrell@consumerchoices.co.ukIt may soon be compulsory for people to provide proof of their income before taking out a mortgage.
Self-certification mortgages are set to be outlawed by the financial regulator. These mortgages allow borrowers to apply for a loan without proving their income.
| It is likely that a ban on self-certification mortgages will also signal the end of fast-track mortgages. |
The Financial Services Authority (FSA) (www.fsa.gov.uk) is expected to propose rule changes that would require all potential borrowers to provide proof of their income, in its mortgage market review discussion paper which is due out next week.
Darren Cook, spokesperson at financial information company Moneyfacts (www.moneyfacts.co.uk), said the demise of the self-certification mortgage began shortly after the start of the current mortgage crisis in early 2008.
He said: “If self-certification mortgages are proved to be one of the strong catalysts of the mortgage crisis, then they have only a place in the history books of personal finance.”
Cook added: “It is likely that a ban on self-certification mortgages will also signal the end of fast-track mortgages.”
Self-certification mortgages were originally designed to help people who could not accurately prove their income, such as those who were self-employed or contract workers.
There are now only two self-certification mortgages left in the market, both available from Platform, part of Britannia BS, and only available to the self-employed.