Self certification homeowner loans and mortgages have been around for several years now and, although they have had a lot of bad press over the course of the past couple of years, due to being used fraudulently to over estimate a person’s income in order to allow them to obtain a larger loan than they can realistically afford, when they have been used correctly, they have provided an important source of loan funding for many self employed people, along with those who may have several sources of income, or an unusual or irregular pay pattern, such as sales people working solely from commission payments, for example.

But the effects of the credit crunch and recent banking crisis have had a dramatic effect on self certification loans of all kinds.

A recent survey from Evaluate Technologies has revealed that self certification loans now only account for less than 2 per cent of the total home owner loan market, with only 22 products available on the market and all of these are on a fixed rate basis. Prior to the credit crunch, in December 2007, loans on a self cert basis made up somewhere in the region of 17 per cent of the total home owner loan market, with 381 different products to choose from, on a variety of fixed and variable loan types.

Julie Speed of Evaluate Technologies said “The plight of the first time buyer has been well highlighted but the self employed have been equal victims of the shrinking mortgage market. Lenders have sought to de-risk their mortgage offering and anyone whose income is difficult to prove is by definition a higher risk customer. Honest, hard working self employed people have few options to choose from and brokers face a stiff challenge finding suitable products for the self employed.”