The recent screening of the BBC’s "The Money Programme" highlighted genuine concerns regarding the way some self-certification mortgages are being sold. These concerns will be followed up by various industry publications and the national press, and do need to be addressed.
Genesis’ stance on the situation is simple. Whilst there is a place and a genuine need for the self-certification mortgage, it is not a licence for the mortgage adviser or applicant to commit fraud.
It is for those genuine cases that self-certification mortgages will continue to have a place in the Genesis product portfolio. For the self-employed and employed applicants who receive income from a variety of sources, – second jobs, car allowances or high bonus pay – traditional lenders are often unable to include these types of income when calculating the maximum loan available. In these instances self-certification of income is appropriate and can greatly assist the applicant to obtain the mortgage required.
Brokers and applicants should be aware that most lenders carry out a ‘reality check’ on the applicant’s income against their occupation. In addition the information available to lenders from the credit check agencies does allow them to make a reasoned judgement on the applicant, and the majority of lenders use this information in their underwriting.
This is also true of the Genesis panel of lenders and depending on the lender in question, reference checks include some or all of the following in verification with the employer/accountant:
- Does the applicant work there?
- What position does he/she hold?
- Are they on a permanent contract?
- Are they under notice of termination or redundancy?
- How long has he/she been self-employed?
- Is the business solvent and still trading?
- How long have you acted on behalf of him/her?
Finally, the underwriter will look at the applicant’s income in respect to the occupation they have and decide if the amount declared is reasonable – a ‘reality check’.
Self-certification remains a product that can benefit a client in the right circumstances. As long as these mortgages are used correctly, and the applicant is made fully aware of their commitments, self-certification will remain a useful product.
