Self Cert Loans : No Proof Of Income?

By Michael Strauss

Along with your credit score, your income is one of the main criteria used by lenders when deciding whether or not to approve your loan application. People with higher incomes will normally be able to borrow greater amounts and at more reasonable rates, and - especially with unsecured loans - it's not uncommon to have to submit copies of your payslips or bank statements in order to prove that you earn the salary that you state on your application form.

But where does that leave people who don't have payslips? More and more of us are now working on a freelance basis, or are self employed, or otherwise don't have a fixed regular income. Can you still get a loan in these situations?

Self Certification

The answer comes in the form of a type of finance known as a 'self cert' loan. This is short for Self Certification, and the basic idea is that you sign a declaration that you earn a specified amount in an average year, and the lender will then take you at your word and will require no further proof of income. Self cert loans are most commonly found as mortgages, but are also available as secured loans too, although unsecured self certs are rare.

There are of course drawbacks to the self cert system. This kind of loan is automatically classed as an impaired credit loan, or sub-prime, no matter what your credit rating really is. This means that the interest charged will be at a higher rate, the security you provide will have to be substantial, and you won't be able to borrow as much against the security as would someone with a fixed and provable income.

Despite these drawbacks, self cert loans can be a real winner for people with no proof of income who have traditionally struggled to be extended finance on acceptable terms. You might have to pay a little more than the going rate, but with so many lenders now offering self cert deals you can now usually find a good loan at a good price, without a payslip in sight.