Income

Income-stretching.

Newspaper and television investigations in recent years have exposed several brokers and advisers who have been pushing self-cert mortgages at ordinary employees who simply see them as a way of stretching their incomes to the maximum. It’s actually an offence to lie on a mortgage application form. But most people in the industry will admit that some people are doing just that on self-cert deals. They say that standard income multiples and affordability measures are there for a reason – to stop people over-extending themselves when they apply for mortgages. Borrowers who use self-cert terms to take on unrealistically large loans could end up unable to meet the repayments if mortgage rates rise or their incomes fall. In theory a repossessions crisis could be on the cards if self-cert has indeed been widely abused.