Specialist lending explained

What are specialist mortgage lenders?

Specialist lenders and specialist mortgages aren’t as widely known as the big banks and building societies, but they exist to help people who’d otherwise struggle to get a mortgage with a mainstream lender. 

High street banks are more rigid in terms of who they'll lend to, so if you have any kind of bad credit or work differently (such as self-employed) then it's unlikely they’ll accept you.

Anything less than a spotless credit report and a simple 9-5 income can be enough for a high street bank to reject you. That's why so many self-employed and people with adverse credit struggle to get a mortgage with the usual banks. A computer sees an unstable income as ‘high risk’, usually making for an automatic “NO”.

Specialist lenders offer bespoke services for people who don't fit the narrow criteria of the high street banks or building societies. They use human underwriters (someone that weighs up the risks associated with lending to you) and assess each application on a case-by-case basis. They look for the story behind the numbers and are set up to deal with applications that aren't straightforward. 

Because they’re more niche, they aren’t usually available directly to you as a borrower. They won’t come up in online comparison sites and your banks won’t tell you about them - they only work through specialist mortgage brokers, like us. 

There’s not a lot of visibility of the specialist mortgage market, so we’re doing something about it.

Why would someone need a specialist lender?

You’ll usually need a specialist lender if your situation differs from ‘the norm’. The big banks and high street building societies have pretty rigid criteria for any mortgage applicants. So if you have any form of bad credit, are self-employed, or have a more complex situation then you’ll probably struggle to get accepted. They’re just not set up to deal with applications that aren’t straightforward - and many use automated systems to make their decisions. 

People who might need to apply to a specialist lender include:

• Those with adverse credit issues

• The self-employed (contractors, freelancers, business owners, company directors)

• People with different income streams (commission-based, maternity leave, part-time, benefits, zero-hour contracts)

• Different purchase types (government schemes, guarantor mortgages, joint borrowing, using business profits)

• Single or lower-income applicants

It’s common for people to give up on getting a mortgage after their bank rejects them. But just because one lender says “no”, doesn’t mean that you’re not eligible for a mortgage at all. You just need to find a lender that deals exclusively with people like you. That’s where specialist lenders come in. 

Specialist lenders use human underwriters that assess applicants on a case-by-case basis. They listen to the story behind the numbers, and look for reasons to help rather than refuse it.

Are specialist mortgages the same as sub prime?

No way! You might be feeling sceptical about getting a mortgage from somewhere that’s not a high street bank, but specialist mortgages are not the same as the old subprime mortgages that caused the 2008 financial crisis. 

Before 2008, mortgage applicants were able to self-certify their own income without any background checks or affordability tests. This meant that people were borrowing WAY more than they could afford. 

Back then, lenders weren’t tightly regulated. They approved lots of mortgages as they expected borrowers who couldn’t pay would simply sell their house at an inflated cost rather than defaulting on their mortgage. But house prices fell, and many people were unable to make repayments. 

Getting a mortgage today is a far different experience. You can’t self-certify your own income, and lenders require a lot of information from you about your financial circumstances. Your affordability will always be thoroughly checked when you apply, and you’ll only get a mortgage if a lender is certain you’ll be fine paying it back. 

So they’re legit?

Absolutely. There’s a big misconception that specialist lenders only cater for people who’ve been irresponsible with their money. But that’s not true. Specialist lenders are regulated in exactly the same way as the high street banks - adhering to strict guidelines set out by the Financial Conduct Authority and the Mortgage Market Review. 

All lenders, whether high street or specialist, will thoroughly ‘stress test’ your ability to pay. They’ll look at hypothetical situations and see if you could still pay your mortgage if something unexpected happened. And as specialists use human underwriters, they’ll be looking even more closely to make sure you’re safe to lend to. 

There’s still a lot of stigma when it comes to credit issues. People can fall into bad credit for a number of reasons, whether it’s job loss, sickness, or even a forgotten parking ticket. This doesn’t mean that they can’t be trusted and should be punished for years to come. Many of our customers have worked tirelessly to turn their lives around and were still rejected from the high street before coming to us. We’re shining a light on specialist lenders and letting more people know that there are other options out there. 

Are specialist lenders more expensive?

The old saying goes “the greater the risk, the greater the reward”. Specialist lenders are willing to lend to those turned away from the high street, and their service is far more tailored and personalised, so their rates reflect this.

For example, most big banks need you to have at least three years’ accounts if you’re self-employed, but many specialist lenders will consider you with one year or even less. That’s a bigger risk to them, so the interest rate will usually be higher. 

Specialist lenders also position themselves as a go-between; a bridge to help people onto the property ladder where the high street would have rejected them. Think of it this way, if your credit score was low right now, you probably wouldn’t qualify for a high street mortgage. But another two years down the line, your credit would improve and so you’d have more options open to you. Specialist lenders provide that opportunity to build a roadmap back to the high street, and so their rates reflect this shorter relationship. 

But just because you need a specialist lender, doesn’t mean you can’t get a competitive deal. Working with an independent mortgage broker like Haysto will not only give you access to these lenders (that you wouldn’t have on your own) but our Mortgage Experts also have great relationships with them. They’ll know which mortgage fits your needs and can put together a fab application. Make an enquiry to find out your options. 

How do I find a specialist lender?

Specialist lenders won’t turn up on online comparison sites and your bank isn’t likely to tell you about them. Nearly always, you’ll have to work with a specialist mortgage broker to get access to them. 

A mortgage is a big financial commitment and there’s a huge amount of options and choices in terms of lenders and products. When adding complex financial situations on top of this, most specialist lenders need customers to work with a dedicated mortgage advisor.

A specialist mortgage broker (like us) uses knowledge and expertise to help customers navigate their way through what can be a confusing process, getting them the right mortgage with the right lender. Make an enquiry to find out your options. 

Do I really need a mortgage broker?

If you’re confused about your mortgage options and worried about getting accepted, speaking to a specialist mortgage advisor is the best place to start.

Buying a home is probably the biggest purchase that you’ll ever make, so it’s important to fully understand your options, get clear advice, and feel confident you’re getting the right mortgage for you. If you have any added complexity on top (bad credit or self-employed) then getting expert help is a no-brainer.

A good mortgage broker will ease the stress by taking care of admin tasks like researching mortgages, putting your application together, and dealing with the lender. All these tasks can feel like a full time job if you do it yourself. Brokers live and breathe mortgages, so they’ll know which deals are the right fit for you and how to get the most competitive rates. 

A report from the Financial Conduct Authority showed that 75% of people who took out a mortgage through a broker said they got a better deal than if they were doing it alone. Expert advisors can also help you consider options you’ve not previously thought of, giving you the best chance of becoming a homeowner, whether through a specialist or high street lender.

All our Mortgage Experts are fully qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere. Make an enquiry to find out your options.