In this brief blog, we are going to discuss what a non-status mortgage is, how to get a non-status mortgage and the alternatives.
What are non-status mortgages?
Non-status mortgages are mortgages which the mortgage lenders do not require any proof of income. non-status mortgages are also known as self-cert mortgages, self-status mortgages, or self-declaration mortgage. non-status mortgages were very popular in the past but are now much harder to get in the UK but can be found in Europe.
These mortgages usually suited those who had unusual jobs or were self-employed and found it harder to prove their income.
The usual maximum loan to value is around 70% and the mortgage is secured against a property.
In many cases, a credit check will not even be carried out but the mortgage application will be approved based on the value of the property and the ability of the borrower to repay the mortgage based on what they have told the lender.
These mortgages will usually charge a very high rate of interest and can be seen as risky if you fail to meet your monthly mortgage repayments.
non-status mortgages are not regulated by the FCA and you may not have any means to complain or report or claim any compensation if you think you have been mis-sold a mortgage.
These mortgages are great for individuals who cannot prove their income.
There are a lot of people in the UK who are classed as self-employed and most of these people may still struggle to get a standard repayment mortgage. A non-status mortgage may help fill that gap but it comes with its risks.
Most mortgage lenders have now adopted their underwriting and lending criteria so mortgages can now be easily accessed by self-employed borrowers with mortgage rates that are very competitive.
Who are Non-Status Mortgages good for?
Non-status mortgages, also known as self-cert mortgages, self-status mortgages, or self-declaration mortgages may be considered good for people who are unable to prove their income or maybe people who have unusual jobs with infrequent income. It could also be good for people who work mainly on commission-based jobs.
These could be:
Delivery drivers etc
An example of how non-status mortgages work is by looking at an individual who earns a salary of £100,000 and also brings in an additional £100,000 in commissions and bonuses. Traditionally, lenders will only look at half of the additional income, bringing the total income to be evaluated to £150,000.
Although this is not the full amount the individual earns per year, this is the amount the lender will base the mortgage amount on. A non-status mortgage, on the other hand, enables the individual to borrow funds based on the full £200,000 they earn, counting the full amount of commission or bonuses.
Alternatives to Non-Status Mortgages
There are some alternatives to non-status mortgages which may be able to help creditworthy individuals access mortgages with little time. One of these alternatives is known as a fast track mortgage. For a fast track mortgage, you will not need to provide proof of income but your creditworthiness may be checked extensively by the mortgage lender.
Most mortgage lenders which offer a fast track mortgage will reserve the right to request, and check for proof of income in the future to ensure people are misusing the system.
If you can’t get a non-status mortgage or a fast track mortgage then another option will be to get a traditional capital repayment mortgage by using a good mortgage broker who may be able to find you suitable mortgage options based on your mortgage affordability.
How to Get a Non-Status Mortgage
You may still be able to get a non-status mortgage from mainland Europe by using a mortgage broker but you should be aware that you have an increased risk of having your home repossessed as the mortgage lenders who offer this type of mortgages are less likely to accept you missing your monthly mortgage repayments too often.
A mortgage broker may be able to assess the whole market and let you know which mortgage lenders can offer you this mortgage and potentially advise you of the risks of taking out such a mortgage product.
Bad credit mortgage broker may be the best to approach these kinds of requests.
In this brief guide, we discussed a non-status mortgage.If you have any questions or comments please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.