Customers increasingly opting for specialist lenders

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 20. April 2022

Interested to speak to mortgage brokers about whether customers are increasingly inclined to use specialist lenders. Research from Butterfield Mortgages found that 54 per cent of people would consider a specialist lender, even if it had not come across the company before. This was 65 per cent amongst those aged 18 to 34, 50 per cent for those aged 35 to 54 and 39 per cent for those aged 55 plus. 

However, around 44 per cent were familiar with the term specialist lender. This rose to 55 per cent for those aged 18 to 34, 38 per cent for those 35 to 54 and 35 per cent 55 and over. 

  1. Have customers expressed increased interest in specialist lending? Why may that be?
  2. Are younger borrowers increasingly inclined to specialist lending, why may that be the case?
  3. What is the appeal of specialist lenders for customers? What are the potential hurdles?
  4. What advice would you give customers looking at specialist lenders?

6 responses from the Newspage community

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Lewis Shaw
Founder & Mortgage Expert at Shaw Financial Services
"When you see the words 'Specialist lending', think higher interest rates. Specialist lending is often just another name for bad credit mortgages. People don't consider them because they're a quirky alternative to mainstream lenders, it's usually because their circumstances dictate, whatever they may be, that a particular lender or sub-set of lenders is available to them. As our working patterns change over time, as credit referencing plays a more prominent role, and with more people falling outside the 'norm' of standard employment and/or credit history, we'll likely see increases in this area. If the UK finds itself in a recession, we've already seen banks expecting a significant rise in defaults and missed or late payments, which will naturally result in more non-mainstream lenders to fill that gap."
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Graham Cox
Director at Self Employed Mortgage Broker SEMH
"We find many of our self-employed clients are aware of specialist lenders, and come to us for access, and our niche advice. Some fantastic providers have sprung up in recent years with a modern and refreshing approach to lending. Generation Home is a good example. They're appealing to borrowers because they're often more flexible in their lending criteria than high street banks and building societies. They tend to have less of a checkbox attitude and will evaluate each case on its merits."
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Rob Peters
Principal at Simple Fast Mortgage
"As we are 'complex mortgage experts', we deal with non-standard situations which require specialist solutions as a matter of daily routine. I wouldn't say any borrower ever goes looking for a specialist mortgage lender, but it's what experienced advisers recommend when the situation requires a lender who is willing to accept something extraordinary. Suitable advice is primarily about finding the cheapest solution that meets the clients needs. "Much like anything else, if you buy 'off the shelf', it costs less. The ideal situation is to place every mortgage with an 'off the shelf' mortgage lender, such as Halifax or Nationwide. But not everyone fits that mould. Specialist lending is more bespoke, catering for higher loan amounts, complex income structures, adverse credit, multiple borrower applications, unusual properties, and a vast array of other scenarios."
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Scott Taylor-Barr
Financial Adviser at Carl Summers Financial Services
"I think if the right deal is there then the lender is less relevant to most clients. They just want the best deal for their circumstances and to get the mortgage agreed. "The term specialist lender is also not well defined. Some would view it as those lenders that deal with applications for people with a history of poor credit, others may use the term simply to describe a lender that has no direct-to-consumer offering, others still for lenders that deal with complex income cases."
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Samantha Bickford
Mortgage and Equity Release Specialist at Clarity Wealth Management
Borrowers do not necessarily ask for specialist lending but understand that their circumstances may not meet the requirements of a traditional high street lender. Advice from an experienced broker who can offer specialist niche advice is invaluable in this situation. Specialist lending used to be a nice name for adverse lending however now it covers a wide range of different scenarios to suit modern borrowers. The Mortgage Lender is a good example of a modern lender catering for those with real life situations."
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Imran Hussain
Director at Harmony Financial Services
"I have never come across a client who has expressed interest in wishing to use a specialist lender. The majority of clients want a lender that will allow them to borrow enough money to purchase their home in a timely manner. I have seen nothing specific day to day from younger borrowers wanting to use specialist lenders or lenders they’ve never heard of, they just want a lender to give them the money needed and still be there at remortgage time. "The only appeal of specialist lenders tends to be due to specific circumstances such as 1 year's accounts or a blip on a credit file. "Borrowers must always be prepared to answer any and all questions a specialist lender will throw at them and shouldn't expect a mortgage offer within 24 hours as that’s not typical of a specialist lender."