Introduction
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Specialist lending is deemed to be any kind of mortgage lending that is not a mainstream, vanilla home loan. It therefore covers buy-to-let, second charge mortgages and adverse credit, and involves an added degree of knowledge over the average mortgage.
Buy-to-let has suffered in recent months due to the imposition of an extra stamp duty charge and other tax changes that make it more expensive to use property as an investment. This has prompted buy-to-let lenders to add extra criteria to their loans, and opinion is divided over the impact this will have on the housing market.
Will this put rents up, to make life even more difficult for those wanting to get on to the housing market, or will it make more properties available for house purchase for those same would-be first time buyers?
Landlords who need to borrow will at least have to endure higher mortgage payments.
Regulation of second charge mortgages by the FCA is now changing the dynamics of the secured loan industry. Formerly controlled by packagers, the loans are being sought directly by advisers from the lenders.
There are now improved disclosure requirements, and the introduction of a seven-day reflection period that allows contact between lenders, intermediaries and borrowers to ascertain if the product is for them, and waive it if necessary.
Adverse credit is another area of lending that has undergone a revamp. Prior to the financial crisis, many people who could not afford mortgages were offered them, and they were being waived through without any checks.
Following the Mortgage Market Review, this has changed, and the permission for lending to someone with patchy credit history has become stricter. Lenders will look favourably on those who improve their credit score, and many more lenders are now offering these loans.
Specialist lending has moved over the past few years from being a marginal business to one that has become more mainstream. It is more appealing to lenders, and financial advisers will find themselves more often receiving requests from clients.
