No salary? No problem

On my own, I would find it difficult to get a mortgage. This is not because I am hugely in debt or have a dodgy credit rating. It is not even because I am on an especially low wage. It is simply because, as a freelance journalist, I am 'self-employed'.

Currently 3.1 million Britons fall into this category. They represent 10.6 per cent of the working population, according to the Office for National Statistics. And the figure is set to rise.

So it is no wonder that financial institutions are starting to relax their policies towards this sector of the economy. Most still require them to supply three years of accounts to prove their income. But some have reduced this to 12 months.

A few have gone further and introduced a self-certification mortgage, where applicants simply make a signed declaration of what they earn. Supposedly no further proof is required. Just a quick phone call to the accountant to confirm the information provided, and in theory that's it.

But how available are these self-certification mortgages? And how realistic are the criteria? Who qualifies? More to the point, who doesn't?

To Stephen Alambritis, head of parliamentary affairs at the Federation of Small Businesses, none of this matters because 'the self-employed are still treated as second-class citizens. Banks remain uninterested in our members'.

Yet it seems things are getting better, certainly compared with 10 years ago when, for example, one Somerset interior decorator who couldn't get a mortgage was forced to take out a loan with a solicitor, paying a punishing 17 per cent interest.

Today, Moneyfacts lists 15 lenders - all with competitive rates - which will provide self-certification mortgages. Of the better-known names, the Bank of Ireland, Abbey National, the Halifax, and Bristol & West, all offer a standard variable rate of around 7.74 per cent. Legal & General has a flexible rate of 7.35 per cent.

Norwich Union, through its specialist arm Mortgage Express, provides a discount rate of 6.45 per cent while the Nationwide, through its specialist arm UCB Home Loans, has a discount rate of 6.09 per cent.

Smaller players include Private Label, Verso, Mortgage Express, Mortgage Business and the Birmingham Midshires Building Society. The latter is one of the newest entrants.

Head of borrowing Steve Sandiford explains why the company has entered the market: 'It is a response to the changing world of work. Increasingly, people are becoming self-employed. And as the job for life no longer exists, greater numbers are doing short-term contracts and running portfolio careers. As a result potential mortgage customers are finding it difficult to prove that they have a regular and consistent income. Self-certification removes these barriers.'

It is a growing market, agrees Denzil Morgan, director of specialist lending at Bristol & West. 'This is why we are seeing more efforts being made to help more self-employed people.'

Yet challenges remain. For one thing some deals, such as those with Abbey National and the Halifax, are only open to existing borrowers, while others can only be arranged through a broker rather than direct through a branch.

Another problem is that most demand a 15 to 25 per cent deposit. Very few are available to people who have been trading for less than two years.

Even fewer are available to first-time buyers. Capital Home Loans and the one-branch building society National Counties inEpsom, Surrey, are two of the rarities that genuinely operate on a case-by-case basis.

So, if you have only been trading for 18 months and are renting a property, you will find your options for a self-certified mortgage limited.

'The fact is, the industry is not looking to extend its risk,' says one insider. 'They are not prepared to support someone who has a great idea but is yet to turn that idea into a sustainable business. Equally, they do not want to take a chance on someone who has not already proven that they can meet the demands of making regular mortgage repayments.'

If all that isn't problematic enough, the definition of self-certification is open to interpretation.

Some lenders insist they offer a 'true self-cert' because the applicant's word is taken as truth. No further research is done. Others freely admit that they conduct additional checks and ask additional questions.

With good reason too, argues Steve Sandiford of Birmingham Midshires. 'There is undoubtedly more risk attached to self-certs. There is a danger people could over-stretch themselves. We have to do what we think is necessary to ensure that that doesn't happen. We don't want to see anyone get in a mess.'