A clampdown on self-certification mortgages will commence at the end of this week, after the sector’s last provider claimed it was withdrawing from the market, following a report on the poor debt management of many self-cert mortgage holders.

Platform, a division of the Co-operative Bank, announced that they would be taking their self-certification mortgages off the market two weeks after the Financial Services Authority (FSA) issued a report proposing a ban on future self-cert home loans.

These home loans (also known as “liar loans”) were popular amongst the self-employed and freelance workers whose income was irregular, as they enable borrowers to verify their own income without evidence of income or overall salary.

However, some companies and brokers allowed borrowers to inflate their incomes and take out larger home loans. Following the economic downturn, many of these people are now in difficulty struggling with mounting debt problems, and their mortgages cannot be maintained.

In the report by the FSA, they found that there was widespread evidence of fraud and a higher than expected number of borrowers in arrears among those with the controversial loans. As a result they have proposed that all future mortgage applications require lenders to verify income.

David Tweedy, Managing Director at Platform, said: “The FSA mortgage market review paper has shown that continuing to offer self-certification mortgages in its current format is unfeasible, and, after careful deliberation of the paper, Platform has now taken the decision to withdraw from the self-certification market.”

Ivan Cooper, Chairman at debt advice specialists Chiltern, said: “The end of self-cert home loans will hopefully restore sensible lending practices, as people will have to prove that a mortgage is affordable before it is granted.

“Those experiencing debt management problems at the minute would do well to speak to an expert for some impartial debt advice.”

Existing self-certification mortgage holders won’t be affected by lender’s decisions to withdraw their accounts and they should continue to run as normal.

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