Mortgage brokers have expressed concern about a new mortgage that allows self-employed people to borrow almost €1 million by using bank statements rather than audited accounts to prove their income.

Start Mortgages provides mortgages to people who have difficulty getting loans from mainstream lenders.  These include self-employed people who find it difficult to prove their income and people with poor credit records.

The firm last month launched a new mortgage for self-employed people who do not have credit problems.

The mortgage, FlexiStart allows borrowers to 'self-certify their annual income up to €250,000.  A self-employed person earning €250,000 a year could borrow as much as €959,000 over 40 years, according to Start.

With self-certification, lenders can advance loans based on a certain income, even if the self-employed person only provides recent bank statements as proof of that income.  Most mainstream lenders require audited accounts from self-employed people before they approve a loan.

Start's rival GE Money allows self-employed individuals to self-certify their income up to €75,000.

Under the sub-prime mortgage recently launched by Permanent TSB and Merrill Lynch, self-employed individuals can self-certify their income up to 150,000.

An applicant who self-certifies an income of €150,000 could borrow up to €640,000, as long as they have no credit problems and are borrowing less than half of the value of the property, according to a spokesman for Permanent TSB.  Michael Dowling, president of nationwide mortgage brokers, the Independent Mortgage Advisers Federation (IMAAF), said:  "Before the launch of FlexiStart, Start only allowed self-employed people to self-certify their incomes up to €150,000.

"This new limit is a significant increase.  Lenders are taking a huge leap of faith when people say they earn more than they can prove.

Start Mortgages rejected the suggestion that self-certification allowed people to secure larger loans by inflating their earnings.  "We've a forensic underwriting process," said Paul Murphy, head of marketing with Start.  "It's not like people can dream up these numbers.  We look for three months' current bank statements when an applicant is self-certifying their income.

Murphy said the company examines an applicant's credit history, including credit card and loan statements.

"We have a lot of knowledge of self-certification," said Murphy.  A new sub-prime mortgage, Nua Homeloans, was last week launched by Finance Ireland, which provides equity release loans for the elderly, and the banking group, Invested Holdings.

Louise McBride