With the recent budget announcements putting personal and business finance firmly in the spotlight, it has become more important now than ever to focus on the issues facing homeowners and potential new borrowers. With many incomes being significantly impacted by the COVID-19 crisis over the last 12 months, it is anticipated that there will be a sharp increase in the need for specialist mortgage products.
Meeting the strict mortgage criteria necessary for most high-street lenders has become problematic for those looking to purchase or re-mortgage a property. Banks are less willing to accept applications from the self-employed due to them being risky and complicated, resulting in an increased number of clients requiring specialist residential finance options.
This issue does not only affect lower-income borrowers but also those in the high-net-worth category. High-net-worth individuals have seen an increased level of mortgage application rejections and longer delays. Butterworth Mortgages recent research data suggests that as much as 18% were turned down for a mortgage in the last 10 years, which is an increase of 6% from a similar survey conducted in 2019. A significant 51% of applicants who had successfully or unsuccessfully applied in the last 10 years turned down at one time or another.
Securing credit due to complicated income structures appeared to be one of the main issues with applications, with 63% stating they had been rejected for this reason. Also, 78% feel that the rigid methods used by the banks prevent them from accessing financial products, forcing them to look elsewhere.
With confidence in high-street banks stated to be at an all-time low, a huge opportunity has opened for mortgage intermediaries to direct borrowers to the right specialist lender who will be able to cater for clients who have complicated or multiple sources of income.
Mortgage brokers across the UK have reported a steady increase in demand for specialist mortgage products, which, due to the pandemic, is expected to continue to rise. Thankfully, many lenders have adjusted and adapted to meet the changes required, allowing a more flexible and broader approach to applications from a wide range of income source types.