Guy Kingston
Entrepreneur Guy Kingston says plans by Britain’s financial regulator to axe self-certification mortgages could prove a disaster for those who run their own businesses.
The move, by the Financial Services Authority (FSA), would mean borrowers must provide proof of their income before being granted a mortgage.
Guy says the move would effectively outlaw self-cert mortgages at a time when the number of products is already at an all time low.
“Already mortgages discriminate against the entrepreneur because of the ‘affordability’
“You can borrow against your house but that means a business loan at a much higher rate of interest. If lenders are happy to shoulder the risk of self-cert mortgages then they should be allowed to do so.”
The FSA’s discussion paper is out for discussion until 30 January 2010 with the FSA actively seeking views from consumer groups and industry.
“I would urge entrepreneurs and freelancers to make representations and make their feelings known,” added Guy.
“Surely we business owners are grown up enough to make our own decisions. We don’t need this sort of nanny statism. There’s no good reason why anybody shouldn’t be able to borrow, say. 50% of the value of their property for whatever reason providing they understand the risks.
“This affordability criteria is too restrictive, designed by well-intentioned bureaucrats but riddled with negative, unintended consequences.
“At times like this we need to be encouraging enterprise, not stifling it.
“If the product is properly assessed and sold to people for whom it was originally designed there is still a place for self-cert loans in the market.”
Since their introduction in 2004 self-cert loans have provided a vital source of funding for self-employed people or anyone with irregular income.
The self-certification mortgage market accounts for around 5 per cent of total advances each year.
However, the market has virtually dried up following the economic downturn, with only one major lender still offering the product.
