Specialist lenders are a vital part of the overall mortgage market, they cater for a diverse set of borrowers. While mortgage lending has historically been dominated by high street banks and the big building societies, specialist lenders provide solutions for those who are outside of the mainstream. Our Managing Director, Sally Laker, takes a look at the specialist market and some of the opportunities for advisers in 2020.
Since the financial crisis in 2007-2008 the needs and credit profiles of consumers have been constantly evolving, and specialist lenders emerged with criteria to meet the needs of customers that didn’t fit the mainstream lenders appetite.
As the specialist market grew, especially in the Buy-to-Let sector, the mainstream lenders gradually extended their appetite and criteria to meet the needs of some of those customers.
Now, people lead more complicated lives, with adverse credit, divorce, and complex income and therefore criteria is key. Underwriting on a case by case approach and judging each case on its own merits can make a difference to the amount that your customers can borrow.
So, here are a few opportunities in the specialist market for 2020…
Specialist buy-to-let lender Paragon have reported that portfolio and complex landlord business dominated their mortgage completions in 2019 with specialist landlord business now accounting for 89% of all their buy-to-let completions.
We are likely to see this trend continue as landlords who are focussed on growing and diversifying their property portfolio will look for other ways of maximising their rental yields. We could see a rise in HMO properties, holiday lets and student lets as they look to take advantage of new opportunities.
Also, more landlords are looking towards operating their buy to let business as a limited company. Research from Precise Mortgages found that 62 per cent of landlords with 10 properties or fewer intend to purchase their next buy to let property within a limited company structure.
As well as this, the UK is seeing a rapid rise in those who are becoming self-employed. Britain’s own bosses now account for 15.1 per cent of the entire country’s workforce, which highlights a massive opportunity.
Although this is a brief overview of a few opportunities within the specialist market, it is growing. There are now a whole host of products available for customers with their complex needs and so it is important that advisers are staying on top of any changes within the space so that they can continue to provide their customers with the best possible service.
“It is important that we listen to the opinions and ideas of our brokers. We know that offering a more personal service enables us to assist brokers to deliver a first class service to their customers. ”