In a statement on its revamped website, the controversial lender also said that there was no evidence that self-certification mortgages were banned by the regulator in the UK.
Self-cert mortgages, where income is not verified, effectively became banned under the Mortgage Market Review (MMR), when affordability checks became mandatory it said income must be evidenced by a source ‘independent of the consumer’.
Launched by founder of Quick Loans Graeme Wingate, SelfCert.co.uk bases its offices in Prague in the Czech Republic, allowing it to circumvent rules imposed by the Mortgage Market Review which saw self-certification mortgages banned in the UK.
With just £50m available to lend for 250-300 average sized mortgages, the firm has been forced to cease new business after receiving over 7,500 applications for its products.
At the end of January, the FCA issued a consumer statement about self-cert mortgages, warning that these borrowers would not be protected by UK regulation or the Financial Ombudsman should problems occur.
Meanwhile, the lender’s website said: “The FCA says that you must pay for mortgage advice, why? If you want advice, then feel free but we don’t insist you spend £1500 plus for it.”
While the FCA requests that all mortgage borrowers must have the option of taking out advice made available to them in the application process, consumers are not forced to take it. Equally, not all mortgage advisers charge customers for their services and often instead rely on lenders’ procuration fees to fund their business.
The lender has also issued a response to the FCA’s consumer warning on self-certification mortgages, in which SelfCert.co.uk says there is ‘no evidence’ that self-cert products have caused any more harm than any other mortgage deal in the past.
The lender’s website stated: “It’s hard to say why it [self-cert] is banned, we don’t want come across all conspiracy theorist and come up with reasons that we have no evidence for. If we flip round though, where is the evidence that they should be banned? We have never seen it, it’s actually the FCA and politicians who are dealing in conspiracy type theories without evidence.
“Why are they banned? Is a very tough question, we don’t know exactly. As some very smart person once said – “follow the money.”
Underneath a further section labelled ‘Are Self Cert’s [sic] Irresponsible?’ the lender said: “There is no way for us to answer this question but the answer is “it depends”. Are cars irresponsible? Or Are buses irresponsible? Well, no they aren’t if used correctly, the same applies to self-cert products.”
The FCA declined to comment while Graeme Wingate, founder of selfcert.co.uk was also unavailable to comment.
SelfCert.co.uk customer case studies
The lender has included a number of ‘real examples’ of its typical borrower. Here are some of its case studies:
’60 years old and on the scrap heap’
“I have just turned 60 and although I have a 70% deposit for the home I want, I’m struggling to get a mortgage due to having a self employed status since I retired last year. With no accounts yet, and no history of trading, nobody is allowed to lend me anything.”
‘Stuck on a crippling SVR’
“I am a self employed engineer but only have one year’s accounts. Most mortgage lenders in the UK will not lend on one year’s accounts and the lenders that will have a higher interest rate than I pay now on a SVR as my initial deal has finished.
“I am looking to borrow approx £297,500 to move house. I have a £52,500 deposit ready.
“I have worked out that I can currently afford £1,000 per month on a mortgage as I have low living costs with no dependents and own my car outright, which I believe would work on an interest only deal.
“In two year’s time when an outstanding loan completes I will be able to go to a repayment mortgage up to £1,500 per month. This would still only be 33% of my monthly income and easily affordable to myself.
“I would love to hear to back from you [as it would] enable me to move house.”
‘Self employed contractor and can’t get a mortgage anywhere’
“A number of years ago the company I had worked for, for six years told us all that we would all have to go self employed to continue working for them. We had no choice because they didn’t want staff on the books.
“I have a 35% deposit for the property I want but can’t get a mortgage because I have no contract anymore. I am still working for them, but after I have made my deductions on my accounts my earnings look a lot lower than they actually are. This hurts me when proving what I am really earning.”
‘Interest only coming to an end’
“I took out a Self Cert interest only back in 2001, it was over 20 years and with houses prices rising since then I basically have around 60% equity but still need to find a mortgage for the remaining 40% (£65,000) from somewhere in the next 5 years otherwise I will lose my home.
“I am currently unemployed due to illness but will be going back to work later this year, I will be going back to being self employed/company director. I’d like to be able to get a mortgage in place to allow me to pay that money back over 10 more years rather than having the extra pressure of doing so over the remaining 5 years.”