Pink Home Loans has introduced the exclusive self-cert mortgage.
Aimed at self-employed people who have had trouble getting a mortgage in the past because of difficulties in proving their income, it has a discount of 2.65 per cent for the first six months of the mortgage, giving it a payable rate of 3.98 per cent for loans of up to 85 per cent of valuation.
After the discounted period the mortgage will revert to a rate of 1.38 per cent above the Bank of England base rate. Applicants must have at least six months history of working with their current employer.
The self-cert market is growing. Birmingham Midshires has announced that it will join the market, along with Bradford and Bingley. One reason for growth in this area is that lenders are able to charge higher interest rates for what is perceived to be higher risk lending. Self-employed people are seen as being higher risk than employed borrowers because their income may fluctuate depending on how much money they earn and what kind of job they have. Some lenders require two years worth of bank statements and accounts to prove their income and self-cert mortgages normally require more equity. Ordinary mortgages can have a loan to value of up to 95 per cent. However self-cert mortgages normally have a loan to value of between 75 and 90 per cent.
According to Moneyfacts on June 8, 2001 the Pink Home Loans mortgage is the most competitive on the market. The next most competitive is from Bristol & West building society and has a discount of 2 per cent for the first six months of the mortgage for loans of up to 85 per cent of valuation. After the discounted period the mortgage will revert to 1.75 per cent above the Bank of England base rate.
Based on £100,000 mortgage for a loan to value of 85 per cent, London & Country Mortgages says that monthly payments for the Pink Home Loans mortgage come to £528.45. Monthly payments for the Bristol & West mortgage come to £591.27.