Who will finance mortgages for the self-employed?
As the UK mortgage market readies itself for major changes in the future there is concern about those in the self-employed arena and the fact they may not be able to obtain mortgage funding in the future. The effective banning of self certified mortgages, whereby customers certify their own income, is a major blow to the self-employed and could indeed stop many people from entering the housing market in the future.
While there is no doubt that, to a certain extent, self certified mortgages have been abused in the past with some customers claiming incomes way beyond their actual finances, are we penalising the majority for action by the minority?
The main reason for effectively banning self certified mortgages is because of the undue risk which these particular instruments present for mortgage companies. However, the vast majority of those who are self-employed may not have constant income streams even if their annual returns are predictable. This is where the proposed changes to the mortgage arena will penalising those who have acted in good faith in the past and those who would have acted, under the old rules, in good faith in the future.
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