The need for a specialist approach has never been more clear
The following article is supplied by James Briggs, head of intermediary sales - personal finance at Together.
Just before the New Year, as most people were setting their goals for 2022, we surveyed the British population to understand their property ambitions for the year ahead and any challenges they anticipated facing on the journey.
The results revealed an ambitious nation – over half had property dreams they wanted to achieve this year – but the same optimism wasn’t felt for their borrowing options; 28% of respondents said accessing finance would be their main barrier, and more than 45% of first-time buyers and 50% of self-employed participants had doubts they could get a mortgage.
The reasons were varied, but complex income, poor credit, age and deposit kept cropping up in people’s responses. Now, almost six months on, we’re certainly seeing these pulling through into the cases we’re working on.
We’ve been working closely with our panel of specialist packagers to support these clients and keep their ambitions moving, but there are more people we could be helping if they were referred to us sooner and I think the challenge stems from a lack of awareness.
These thoughts are backed up by Ian Balfour, sales and marketing director at TFC Homeloans.
“As a specialist packager, many of the cases coming through us from brokers feature clients with irregular and complex incomes – and this has only increased following the upheaval of the pandemic; I’ve heard that around one in five people changed their employment during COVID, and of course many took a payment holiday which could’ve dented their credit and ability to borrow from mainstream lenders,” he said.
“Delving deeper into Together’s survey results, 16% of first-time buyers said they’d be looking to take advantage of shared ownership in 2022, and we’re definitely getting more enquiries from the intermediary market for mortgages which support assisted purchase schemes.
“When these cases come through the door, we need to be open, flexible, and ensure we’re working with a lender who has the criteria and product range broad enough to accommodate them, which is why we really value our relationship with Together.
“But it’s an unfortunate reality that many borrowers aren’t aware of lenders who can take a common-sense view of their circumstances. Together’s research indicates almost a third of Brits have never heard of specialist lenders, and I think even some intermediaries aren’t fully aware of their capabilities. There’s a real opportunity here to educate the market and break the stigma around specialist finance being a last resort.”
It’s brokers who hold the key to improving a borrower’s confidence in their finance options, which could be the difference between their property ambitions moving forward or going unfulfilled in 2022.
Here’s how you could support more of your clients this year:
1. Broaden your horizons
There was a time when ‘specialist lender’ meant ‘impaired credit’. And while it’s true we can often lend to clients with a credit blip on their record, it’s not the defining characteristic of Together’s customer base. Instead, many of our clients are self-employed or have complex income, or they are retiring and borrowing later on in life.
The specialist finance sector is home to more than just flexible lending criteria. It provides a wide range of products which are vital to every broker’s toolkit. In such a fast-moving housing market for example, bridging finance can offer an important short-term solution where a broken property chain has occurred.
Our common-sense approach to underwriting is fast and flexible enough to account for clients in these circumstances.
2. Front-load your conversations
We often hear of clients frustrated by delays to lending because their circumstances mean they’ve been turned away by mainstream banks, but you could structure your initial conversations to identify potential barriers early on:
- Are they self-employed or a contractor?
- Do they have several income sources?
- Are they borrowing beyond traditional retirement age?
- Is there anything unusual about the property?
- Does it involve Right to Buy, Shared Ownership, or gifted equity?
- Have they had any credit blips?
The more they say ‘yes’ to, the more you should be thinking of talking to a specialist lender upfront.
3. Know your support network
At Together, we have a team of experienced BDMs around the country who can talk to you about your clients’ circumstances and provide examples of real cases we’ve been able to fund. If you’re a broker, you’ll be in safe hands with one of Together’s experienced packager partners.
It’s a belief that Ian Balfour shares.
“Packagers have a really strong understanding of the specialist market and will be able to instantly source the most appropriate solution for your client,” he said.
“Thanks to the strong partnerships we have with specialist lenders, brokers can have confidence a deal will be delivered quickly and efficiently, while they can still hold on to their relationship with their client.
“With all of us – packagers, brokers and specialist lenders – working together, we could help more borrowers achieve their property dreams this year despite their circumstances or timescales.”
For Professional Intermediary Use Only.
*Results gathered from three surveys conducted by OnePoll in December 2021 on behalf of Together. Featuring 2,000 UK participants, 1,000 UK self-employed participants, and 1,000 first-time buyer participants.