Rising debt, changing incomes and affordability pressures are extending the journey to homeownership
The mortgage market has spent years discussing specialist lending as a growing niche. Rita Kohli (pictured) believes many of the circumstances once considered specialist are now becoming commonplace.
Having worked across high street banking, the Post Office network and whole-of-market advice before establishing The Mortgage Stop, Kohli said the borrowers she sees today often arrive with more complicated financial circumstances than they would have done earlier in her career.
“The need has become more and more complex,” she said.
For brokers, that is changing not only the type of cases they handle, but also the point at which advice begins.
Complexity is becoming commonplace
One of the biggest shifts, according to Kohli, is the way borrowers earn their income.
“People are paid differently, job titles are changing,” she said.
The growth of self-employment, additional income streams and non-traditional working arrangements means advisers are spending more time understanding how income is generated and how lenders will assess it.
Affordability pressures are additionally changing who is buying property and when. Kohli said she was increasingly seeing borrowers reach homeownership later in life as rising rents, student debt and the challenge of saving for a deposit delay their plans.
“I’m getting people in their 60s buying a house for the first time,” she said. “They’re fed up of renting, they’re fed up being kicked out.”
While later-life borrowing and complex income structures were once seen as specialist areas, Kohli suggested they are becoming a more regular part of everyday mortgage advice.
The real work starts before the application
For Kohli, one of the clearest signs of change is how much work now happens before a mortgage application is ever submitted.
Clients are increasingly arriving with affordability challenges, larger debt balances and deposits that no longer stretch as far as they expected. As a result, conversations that once focused on products and rates are often centred on budgeting, debt management and longer-term planning.
Rather than simply arranging finance, advisers are spending more time reviewing loans, credit cards and monthly commitments to understand what is achievable and what needs to change first.
“There’s a lot more planning going in,” she said.
Kohli said affordability had become particularly challenging. Even where house prices have remained relatively stable, reduced borrowing power often means buyers need larger deposits than they anticipated.
“What would have been a 10% deposit last year, because affordability’s dropped, you’re having to put in another £5,000 or £10,000 more to make up that 10% deposit again,” she said.
The conversations are becoming broader, too. Kohli said she increasingly discusses family support and explores whether relatives can play a role in helping borrowers onto the property ladder.
Specialist is becoming routine
As borrower circumstances become more varied, specialist lenders are becoming a more frequent part of advisers’ day-to-day activity.
“At the moment we’re finding that we’re speaking to specialist lenders pretty much on a daily basis now,” Kohli said.
She argued that large high street banks continue to focus primarily on straightforward cases, while specialist lenders are often quicker to respond to borrowers who fall outside traditional criteria.
“The mainstream banks sit back, just watch,” she said. “They’ve got the lion’s share of the mortgage market.”
The result is a market where brokers are increasingly moving between mainstream and specialist lenders as they look for solutions to more varied borrower circumstances.
A longer road to homeownership
The shift is also changing what separates strong advisers from the rest of the market. Kohli said the days of receiving an enquiry and submitting an application within a matter of days are largely gone. Increasingly, borrowers require months of preparation before they are ready to proceed.
“Those days are gone when a client would ring you day one and by day two or three, you were submitting an application,” she said.
Kohli said maintaining regular contact had become increasingly important, particularly for borrowers who may still be months away from making an application. She said she routinely checks in with prospective clients to monitor progress and keep plans on track.
For some clients, the timescales can be significant, with Kohli noting that some clients are in discussions for up to two years before being ready to purchase.
That, more than any individual lending product or criteria change, may be the clearest sign of how the market has evolved: for a growing number of borrowers, securing a mortgage is no longer the first step in the process, but the end of a much longer journey.
