The Home-A-Loan report from Shawbrook found that 26% of applicants were declined because they had a “volatile” income, while a quarter had a poor credit score. Some 21% had missed payments and a further 21% were declined because they did not meet affordability criteria.
Shawbrook said specialist lenders were designed to support these kinds of borrowers, such as the self-employed, contractors and those with historical credit blips.
The lender said this lack of signposting highlighted a “significant issue” in the UK’s mortgage market.
Limited consumer awareness
This was further impacted by the fact that just 25% of consumers said they understood what a specialist lender was and how to access one, while 46% had heard the term but did not know what it meant.
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Among those who sought help from a mortgage broker, 97% were able to be connected with the right lender, while the same proportion – 97% – valued the adviser’s specialist knowledge. Some 95% of respondents said this made the application process easier.
Despite this, just 22% used a mortgage broker and Shawbrook said this demonstrated the need for more knowledge on the support available for those who wanted to get on the property ladder.
Specialist lending is a solution
Steve Griffiths, commercial director for retail mortgages at Shawbrook, said: “There is a concerning lack of support for those with unconventional profiles, whether this is due to their employment type or credit history – and this can often stop people’s homeownership goals in their tracks, without any explanation or advice for next steps.
“Specialist lending is a solution to this dead end, but it continues to be something that only a minority of borrowers understand, or are even aware of.”
He added: “Everyone deserves an equal footing on the property ladder, especially as the market and economy continues to change, and there isn’t a cookie-cutter image of the perfect borrower.
“Too many people think a ‘no’ from one lender means the end of the road. In reality, there may be a perfectly viable solution – but the industry needs to do a better job of helping people find it.”
