Are Self Cert's Irresponsible?

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

From a lender's point of view, a lender would want to see a sufficient deposit that would allow them to get their funds back if a borrower couldn't keep up with repayments.

Does a lender have a responsibility to the borrower?

We are talking in general here, not specifically about Self Cert Mortgages. The majority of lenders and borrowers have a shared goal.  This is the completion and repayment of the loan in order to remove the charge placed on the property at a set date in the future. The lender walks away with a profit from interest made on the loan and the borrower walks away with the property at the end of the term.

There will be some lenders that may benefit when a borrower cannot keep up with the repayments. They shouldn't do this, but some lenders will put significant charges in place to cover areas like "late repayments". These charges can be used by some lenders to generate profits and not just to cover their admin costs.

This is something we highly discourage, but we would still find it hard to believe that lenders would target this type of borrower. The potential profit from a few missed repayments, weighted against the possible risks involved to the lenders capital are so insignificant on the big picture that we can't see it happening. If lenders were ever targeting any type of vulnerable borrowers in order to extract penalty payments for profit, we would be strongly against such a practice.

In the views of some a simple credit check can sort it all out, is person a struggling to meet repayments – yes? Then decline them for a mortgage.

To some with no background in lending this is a very simplistic view, but to us it’s just a flag that requires more investigation. If someone is struggling, then would their situation not improve by paying less for a mortgage than they do for rent? Would they not save more money by getting a mortgage that would allow them to move closer to their work, a school for their kids?

Giving people loans can save some people money. Just because people are in current financial difficulties doesn’t always mean that it would be irresponsible to give them a mortgage. 

In general, both the borrower and lender have a responsibility to each other.

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Self Cert is not based in the UK. We are NOT regulated by the Financial Conduct Authority

Prague 1, Czech Rep