A significant number of mortgage applicants are being rejected unnecessarily, and not given access to specialist solutions that could help them secure a home, according to research from Shawbrook.
Shawbrook’s Home A-Loan report, which looked at specialist lending and the struggles facing prospective buyers, found that over a third (34%) of people who were declined for a mortgage were never referred to a specialist lender, despite many of them meeting the criteria for one.
The key reasons cited for mortgage applications being declined include volatile income (26%), poor credit score (25%), missed payments (21%), and unaffordability (21%).
The lack of signposting and support for borrowers with untraditional streams of income or imperfect credit impact many in their journey towards property ownership, highlighting a significant issue in the UK’s mortgage market.
Adding to the problem, only a quarter of consumers (25%) said they actually understand what a specialist lender is and how to access one, and nearly half (46%) said they have heard the term but don’t know what it means.
Specialist lending can be a solution for people turned away by high-street lenders.
For people who sought more tailored help via a mortgage broker, 97% of borrowers found the right lender with the help of their broker, and the same proportion (97%) valued their broker’s specialist market knowledge.
95% also said brokers made the application process easier.
Despite this, only 22% of applicants had actually used a broker – demonstrating the need for increased knowledge on the support available for those on their homeownership journey.
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.
“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.”
