Specialist lenders expected to be busy throughout 2023
In what is a volatile, quickly changing and increasingly complex lending environment, the specialist lending sector is expected to be busy over the course of 2023.
Vanessa Hunt (pictured), key account manager at Harpenden Building Society, said with specialist lenders offering alternate solutions to mainstream lending, she believes they will be key in providing opportunities for brokers to get complex mortgage applications over the line this year.
Rising demand for specialist finance
Hunt said one of the most complex situations seen in the mortgage application process relates to customers with multiple income streams, something that is becoming increasingly common due to the financial state of the country.
“Income can come in many different shapes and forms, created through a range of modern day economic and social factors; however, income diversification creates a complex situation,” Hunt said.
This is where she believes a specialist lender is best placed to help facilitate a positive outcome for a consumer.
According to the Henley Business School, as many as one in four adults are now engaged in a secondary business or job that brings in, or has the potential to bring in, extra income; which equates to 39% of those in employment. To put this into context, the same report states that this secondary source generates income worth £72 billion for the UK, or about 3.6% of UK GDP, no small amount and a worthy contributor in the mortgage space.
These are high numbers but not every lender will take the time to look at this secondary income stream, which is why Hunt expects to see the popularity of specialist lenders rise considerably over the course of 2023.
“Today, as the cost-of-living crisis accelerates, a secondary income is gaining in importance as the population looks for ways to earn extra cash, and to secure a mortgage against their desired property,” she said.
How can specialist finance assist customers?
Hunt said specialist lenders have the expertise and experience to manage the most complex cases through algorithms mainstream lenders may not be able to use.
Specialist lenders often use manual underwriting, allowing for highly flexible solutions to complex mortgages, which Hunt said will be particularly beneficial given the economic climate.
“Specialist lenders consider many forms of complex income, including pension, Trust income, maintenance and investment, as well as standard employed and self-employed,” she added.
Raising awareness of specialist finance
Hunt said that education is key to outlining the merits of specialist finance, and while she noted this type of finance may not work for everyone, she believes customers must be aware of all their potential options.
“The individual, personal underwriting process which gets to the heart of a complex lending situation may not work for all lenders, but to a specialist lender, it is part of the everyday,” Hunt said.
Are you expecting to see the popularity of specialist finance rise over the course of 2023? Let us know in the comment section below.
