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There are some cases that land on your desk which might at first glance feel like it’s going to be a real challenge to place. After all, there’s no way that any standard bank would be willing to offer a mortgage.
But before you say no, perhaps that case is worth another look. There are many reasons why a client may be ineligible for mainstream finance, but that doesn’t mean it should be the end of the road for them.
Specialist mortgages can be key in unlocking the finance that your client needs to purchase or remortgage their own home. Below are five common areas where your instincts might say no, but where a ‘yes’ is a real possibility through specialist finance.
Low Credit Scoring Borrowers
Some borrowers don’t have an excellent credit score, but it doesn’t mean that they can’t get a mortgage.
There are many reasons why a credit score doesn’t always reflect a borrower’s circumstances: for instance, they might be first-time buyers with a very short or limited credit history, are foreign nationals or they may have a couple of minor instances of CCJs or defaults – some of which may be less recent and does not accurately reflect their current circumstances.
Credit history is something that many high street lenders rely on for making borrowing decisions. That doesn’t mean that you have to do the same.
Affordability
It’s fairly evident when looking at how house prices have historically kept on climbing while wages have only grown modestly during the same period.
This means that unless a borrower often has substantial help from family to get up the housing ladder, they find themselves at a crossroads – either they need to rigidly save up for a decade or more before they have a big enough deposit or they need affordability measures such as high LTVs or wider loan to income multiples, or access to affordable housing schemes like shared ownership in order to own property.
Whilst in recent months, there has been more flexibility around income multiples across the mortgage market, there are still borrowers who need specialist solutions. This could be due to not meeting eligibility for low deposit mortgages or needing broader criteria and product options to take advantage of affordable housing opportunities, which is the kind of assistance available through the specialist lending market.
Complex Income
Not every borrower receives a straightforward monthly salary.
Self-employed applicants with a shorter trading history, contractors, CIS workers, applicants with multiple income streams, or those whose earnings include commission, bonuses or other variable elements can find that mainstream affordability models don’t always reflect their actual earning position.
Specialist lenders can offer a more flexible approach to certain types of income, potentially opening up options that a standard lender’s criteria would rule out.
Interest-only Lending
Interest only, in the right circumstances, can offer more flexibility for a wide range of borrowing needs. Specialist solutions can help support borrowers who may not meet restrictive qualifying criteria offered by mainstream lenders.
This might be down to not earning enough to qualify, LTV restrictions or not meeting substantial minimum equity requirements.
Specialist solutions can make interest only more available for more borrowers, particularly where a more personalised approach to underwriting supports a better understanding of a clients unique set of circumstances.
Age & Later-life Lending
Not all mortgage stories start at the same time. Sometimes getting onto the property ladder or remortgaging to release equity becomes harder, the older you get.
Unfortunately, most mainstream lenders have strict criteria for maximum age at the end of the loan term, or rely only on pension income for affordability for over 50’s which means many older borrowers either find themselves unable to get a mortgage with a high street bank as a result of affordability constraints or are unable to remortgage on interest only.
Borrowers over 50 and those looking to borrow into retirement still have options available.
Before you say ‘no’
A case that doesn’t fit the high street’s criteria isn’t necessarily a case that can’t be done. Whether it’s historic adverse credit, complex income, affordability challenges, interest-only requirements or later-life lending, there may be another route available if you’re prepared to look beyond the standard approach.
For brokers, knowing when to challenge that initial instinct can be just as valuable as knowing the criteria itself. A quick ‘no’ could mean missing an opportunity to help a client achieve their goals – and missing out on business in the process.
Want to explore where specialist lending could help? Join our free webinar to discover more about the opportunities available and how to approach cases that fall outside mainstream criteria.
Have a case you’re not sure about? Find your local BDM to talk it through or email mortgagesales@westoneloans.co.uk to make an enquiry.