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Looking For Quick Hints About Finding Self-Cert Mortgages?

May 3, 2008
Here are some handy tips about getting that self-cert mortgage you crave:

First, ask yourself: What are you getting a mortgage for? To buy property. What is a self-certification mortgage? A loan of money, like any other. How else can you get money? By getting a second job or paying past-time, a job that pays better, by cadging it from friends or relatives, by selling something you own, or by saving up the dosh you're already earning.

You must try hard to save up as big a deposit as you can. This can mean the difference between a life of ease or years of hardship later. The more of a deposit you have, the better deal you can wangle from your lender, and thus the less your outgoings later on.

To be worthy of any mortgage, a property has to be brick built i.e. not a mobile residence or other temporary structure. If has to be sound in structure, have Clear Title and ideally no outstanding liens or attachments. Clear Title means the current owner is the sole and legal owner of record; no ambiguity!

You'll need to decide how long the mortgage will be. Common terms are 15, 20 and 30 years. Usually, a shorter term means higher monthly payments, but the mortgage is paid off quicker. This is best for people whose incomes are higher than average and are stable. Most average-income clients go for the longer term periods because aside from a smaller monthly bill that they can budget for, payment plans like this give assurance to lending companies.

If you don't find a self-cert mortgage that seems to match your needs and/or budget, understand that banks and lending companies can offer some 'wiggle room' when it comes to interest rates and fees. It's like any business deal; if they want your business badly enough, if you offer them a fat deposit up front, you can get better terms.

Most lenders are trying to get as much lolly as they can from you; they're not your friend. They will try to sign you up to deals that are in their best interests, not yours. Be wary.

Do a budget of your finances, and use realistic figures. Keep and account of all the money you spend in a month. Divide yearly outgoings, like car-insurance, by twelve and add in those as well. Review and update it regularly. An accurate budget allows you to get the best property for your money without being scuppered by unexpected bills. It also allows you to see how much you're wasting on worthless trifles.

The majority of lenders offer self-cert mortgages of up to a maximum of 95% of the value of the property (and it'll probably be a lot less than that), or its purchase price, whichever is lower. At the time of writing you would be very lucky to get such a deal, as lenders are reining in their criteria. A 20-30% deposit would be more realistic, alas, and better for you in the long run.

If you go down the 'low-deposit' route, another major cost to take into account is the mortgage indemnity guarantee (MIG) premium. This fee covers the lender for the added risk of advancing larger loans. It is usually activated when the loan is for more than 75% of the home's value and rises with the amount you borrow. On loans over 95% it is generally quite high; another reason therefore to save up as much of a deposit as you can, so you can truly relax in your new home!
About the Author
Niccolo Svengali is a promoter for mortgage , loan and insurance web sites.
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