What are Self Certified Mortgages?

Self certified (or self cert) mortgages are mortgages for those who can't give proof of their income in the normal way. Instead of providing the lender with bank statements, payslips and other evidence of income (as is usually required), with a self certified mortgage, the lender need only declare their income. No proof is required beyond a standard credit check.

Self certified mortgages are not in place to encourgage people to be dishonest about, or exaggerate their earnings, instead they exist to allow people with irregular incomes to access mortgage products. The self-employed are the catergory of people who most benefit from self certified mortgages.

There are still requirements that a borrower must satisfy before they can benefit from a self certified mortgage - and in the current financial climate, these requirements have become more stringent.
The borrower must have a significant deposit. This used to be 10%, but is now much greater. In some cases, the lender might also request a lender reference or a landlord reference.

What's the catch? Why doesn't everyone have a self cert mortgage?

Borrowers who opt for self certified mortgages are higher risk borrowers than customers of standard mortgage products - as they don't have to provide evidence of their income. As a result, the interest rate for a self certified mortgage will be higher than a standard mortagage. Today, in the midst of the financial crisis, many banks and lenders have withdrawn their self-certified products altogether. The products which remain require the lender to possess a large deposit and have interest rates at a much higher level.