With an increasing number of mortgage lenders switching to an affordability based model when assessing borrowers’ ability to repay a loan, Roger Taylor, director of sales and marketing at Preferred Mortgages, said the launch of affordability based calculations would allow more borrowers to confirm and verify their salaries and expenditure easier, leading to a drop in those needing a self-certification deal.
He said: “As a result of lenders launching affordability based calculations, we have seen more and more borrowers, who may have gone down the self-certification route, able to verify their income. A number of people have said that the self-certification market is to grow, but I can see fewer and fewer people having to resort to self-certification due to the development of affordability based lending.”
However, James Cotton, mortgage specialist at London & Country, said affordability based lending should not have a massive impact on the self-certification market, and the number of borrowers who have self-certification mortgage deals. He explained: “The growing number of lenders offering affordability based lending means people can borrow more than they typically would have been able to through the traditional income multiples method. Self-certification is not a way to borrow more.”
He added: “It could be a by-product that affordability based lending is leading to reduced numbers of self-certification business, but if borrowers couldn’t prove their income by traditional income multiples, then they should still go down the self-certified route and not try and get more just because of the affordability lending.”
