Given the impact the pandemic has had on household finances, many people are likely to find themselves in a more complex financial situation than they were before the crisis.
Credit scores, in particular, are set to take a hit, which could impact people’s ability to secure a mortgage with the high-street banks.
As a result, many borrowers could find themselves turned down for a mortgage – and offered little to no other options. The good news, however, is that specialist lenders could provide a viable alternative to those with a history of poor or complex credit.
At Bluestone, we’ve already noticed more people approaching us for specialist lending during the crisis as they realise the benefits it could offer them. Our application levels were up by over 90% during January and February 2021 compared to the same period in 2020.
These applications would have come from borrowers with complex financial circumstances, including those with poor or adverse credit.
However, many consumers are still unaware of what the specialist lending market could offer them, or how to engage the support of a specialist lender.
First things first: what is the specialist lending market?
The biggest difference between a specialist and a high-street lender is that specialist lenders don’t base their lending decisions on an applicant’s credit score.
Instead, they take a holistic view of a borrower’s financial circumstances and use that analysis to make informed lending decisions.
Above all else, specialist lenders are committed to supporting individuals in atypical financial circumstances – people who may otherwise be classed as ‘complex’ by the high-street lenders.
This includes borrowers with credit blips, as well as those who are self-employed or have complex income streams.
Scenarios like these are going to become a lot more common following the Covid-19 crisis. According to Citizens Advice, six million people have struggled to meet their regular payments during the pandemic, and the number of new County Court Judgements (CCJs) issued in England and Wales between October and December 2020 rose by 73% compared to the previous quarter.
In many cases, specialist lenders can provide help to borrowers like these. By taking a pragmatic and flexible approach to their lending decisions, specialist lenders can often provide financing to those who may not fit the tick-box mentality of the high-street banks.
Head to an adviser
As a first step, borrowers who want to learn more about specialist lending should always engage the help of a qualified adviser.
Advisers are well-placed to guide clients, particularly those in complex financial circumstances, to the mortgage that best suits their short and long-term needs and, unlike going directly to a lender, borrowers can benefit from a tailored evaluation of their individual situation.
They also often have access to a range of lending solutions that aren’t available elsewhere, including price comparison sites, and can therefore support customers who may benefit from these products.
Complex credit is likely to become a reality for a greater number of households following Covid-19, so it’s important that borrowers are aware of the options that are available to them when they come to refinance their current mortgage or move to a new property.
For those in complex circumstances, approaching a professional adviser will stand them in good stead and provide them with a solution that meets their exact needs.
Steve Seal is managing director at Bluestone Mortgages
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