Mortgage expert Mark Hollands details bespoke, hands-on approach to lending despite increased digitisation
This article was created in partnership with Bluestone Mortgages
The housing market can be an intimidating landscape for first-time buyers, especially in today’s climate. Many individuals feel hesitant to discuss their mortgage options with a mortgage lender if they have a history of bad credit. They might feel embarrassed or uncertain about the reaction. As of December 2023, the average deposit required stands at a staggering £45,154. This figure represents a substantial 19% of the typical purchase cost and equates to a staggering 130.6% of the average UK salary.
Head of sales & distribution Mark Hollands, of Bluestone Mortgages, details the specialist lender’s unique approach to providing mortgages to those with adverse credit and sheds light on the limitations of high street lenders’ approach.
“With mainstream lenders, it’s often a case of ‘computer says no’,” he remarked, highlighting the stark contrast between traditional lending practices and Bluestone’s customer-centric ethos.
Unlike mainstream lenders governed by rigid credit scoring and computer-based lending decisions, Hollands explained, Bluestone adopts a bespoke, hands-on approach.
A path forward for those with adverse credit
“With regards to other specialty lenders, we’re all working towards the same goal - helping people who have had a tough time,” Hollands said. “Fundamentally, we care deeply about the customer. Our willingness to try and assist, and the way we structure our adverse credit criteria differentiate us from our peers. For instance, we’re the only lender whose mortgage products are based on the customer’s credit profile on the day of completion rather than the application. This difference can be significant, as it might be four to six months in the future. Over time, people’s credit reports can improve, which is why our approach is crucial.”
Despite the inherent risks associated with lending to clients with adverse credit scores, Bluestone remains committed to responsible lending practices. Hollands highlighted the importance of diligent underwriting and continuous policy reviews in mitigating risks and ensuring positive outcomes for borrowers.
The differentiating factor between specialist lenders and high street lenders
Hollands pointed out that high street lenders don’t have a manual approach to underwriting. “They don’t have the resources to manually underwrite every application. So, they rely on computer-generated decisions.”
Bluestone recognises three primary reasons for adverse credit. Firstly, loss of income - this loss often stems from job loss or business closures, which, especially in the context of events like COVID, can be prevalent. Secondly, divorce, affecting roughly half of marriages, emerges as a significant financial strain. Thirdly, long-term sickness, whether due to serious illnesses like cancer or prolonged periods off work, disrupts income stability. Such circumstances can lead to difficulties in meeting financial obligations, potentially resulting in defaults and CCJs.
Mainstream lending institutions, reliant on computer-based lending decisions, often struggle to accommodate these complexities. While exceptions exist, the majority of these disenfranchised customers find themselves being turned away by mainstream lenders as they weren’t able to tick all of the boxes.
“We recognise that people’s finances can take a hit due to challenging circumstances. We make our lending decisions based on you showing you can afford to make your mortgage payments, even if you have struggled financially in the past,” Hollands clarified. “To be eligible for our support, disenfranchised customers must have emerged from their hardships, and be able to demonstrate a sustainable income.
“I’ve heard terms such as ‘lender of last resort’ used to reference lenders like Bluestone, but that couldn’t be further from the truth. It’s not a fair characterisation; we are a responsible lender, and we’re selective about who we lend to. We’re here to support customers who have faced challenging circumstances through no fault of their own in recent months or years.”
Embracing technology to streamline decision making
While Bluestone uses manual underwriting for its mortgages, the company fully embraces technology to extend its offerings. Every case undergoes manual underwriting, a necessity given the unique circumstances of Bluestone customers. However, this doesn’t exclude the use of technology to streamline processes and save time.
“For instance, we introduced our new broker portal in February last year, incorporating automation features,” Hollands highlighted. “As pioneers in the field, we were the first specialists to integrate open banking, a highly secure method for data transmission that eliminates the need for physical bank statements.
“Moreover, we’ve implemented automation tools for biometric ID checks, Land Registry verification, and AVMs. This resulted in a significant reduction in processing times, saving approximately 3.5 hours per application. These efficiencies are a testament to the power of leveraging technology intelligently.”
Bluestone is not only reducing operational costs but also expediting application processing times for customers, a benefit everyone desires. In the specialist market, this represents a potentially revolutionary and unique approach in which Bluestone aims to lead the way.
