One of the consequences of higher mortgage rates is that it’s harder for borrowers to achieve the loan size they want for their purchase or remortgage. However, there are many alternative options in the specialist market that could help your clients to achieve the loan size they need.
As specialist lenders take a more hands on approach to income assessment, they can often consider more of a client’s income than the automated calculation provided by a mainstream lender.
At Brightstar, for example, we work with lenders that can go up to 6x income and there are numerous ways the specialist market can help to stretch your client’s affordability.
If your client receives regular overtime or bonus payments, there are lenders that can consider up to 100% of these as part of their affordability calculations. Similarly, there are also lenders that are more considerate of maintenance and benefits payments, which can help to demonstrate a borrower’s true income.
For the self-employed, whereas many mainstream lenders will ask for two- or three-years’ accounts to demonstrate income, we work with lenders that can base their affordability calculations on the most recent year’s figures. This is particularly useful at the moment when you consider that so many businesses suffered a drop in income during Covid.
In addition, for small businesses where, say, a husband and wife are the two shareholders, there are lenders that can base affordability on profits retained within the business, rather than just the salary and dividend they choose to draw from it.
Contractors are also well-served by the specialist market, with many lenders able to base affordability on the daily rate earned by a contractor x48 weeks in the year. This can provide contractors with considerably greater affordability than some of the more traditional methods of assessing their affordability.
And hands-on underwriting also means that specialist lenders can often better consider an applicant’s income into retirement, as long as they are paying into a pension and the case makes sense on its own merits.
So, don’t just think of the specialist market as an area reserved for borrowers with adverse credit. It, of course, serves those customers very well, but it can also provide an excellent way of securing the loan size that your clients with a clean credit record need to secure the loan size they want.
Gina Blagden is head of sales at Brightstar
