Self-cert mortgages are aimed at borrowers who have trouble proving an annual income because they are self-employed or receive commission or bonuses. Some lenders allow borrowers to state their income without evidence to prove it.
However, a review of the self-cert market, carried out by the Financial Services Authority (FSA) last year, revealed significant inaccuracies in record keeping, which has led to closer monitoring of this area of mortgage business.
Paul Sherman, mortgage proposition director for mortgage distribution business, Openwork, said: Lenders need to show greater consistency on how they go about policing self-cert. If lenders and compliance teams are in line with one another then problems with the fabrication of figures show be dramatically reduced.
Sherman urged lenders to adopt a responsible approach and drive consistency and suggested that mortgage brokers need to select their clients carefully and advise them responsibly.
He warned mortgage advisers not to be enticed by the higher fees on offer from self-cert products: Not only must advisers be sure they are not just chasing the higher fees, they must also ensure that they keep up-to-date with the marketplace which is changing rapidly with new players entering the market all the time.
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