In the past, specialist lending was often perceived in a negative light as it aroused thoughts of cutting corners to complete a deal, a place where override payments thrived and loans were flogged to unsuitable borrowers. As a result, some people in the industry believe that specialist lending requires an image change. However, the days are long gone when it was frowned upon as the domain of the back street broker and it is time the mortgage industry steps away from these historic perceptions, to recognise the strides that specialist lending has made to respectability and embraces its true potential.
The lending landscape
Instead of focusing on ‘vanilla’ cases, specialist lending is dedicated to providing alternative solutions to cases that lie outside of the high street straitjacket. It is a legitimate and growing form of finance because not everyone can have a perfectly clean credit record, nor can everyone always show completed tax returns, for example.
It was often the case that brokers walked away from cases which did not fit the ‘traditional’ lending criteria but non-standard cases are now on the rise, with more and more brokers turning to specialist distributors for guidance.
Therefore, I believe specialist lending does not require an image change because it has already made so much effort to improve the respectability of the sector; it has done this and it now does exactly what it says on the tin: specialist lenders offer a specialist approach to real life lending in a specialist market. It is about placing the more complex cases and doing what the high street can’t, hence it is a vital part of the lending sector.
Staying ahead of the curve
According to a recent survey by Pollright Research, 60% of brokers believe specialist lending will take a bigger share of the market over the next few years while 20% said their clients would benefit from applying to a specialist lender. If brokers can show their clients the benefits of specialist finance and if they have completed the necessary checks, there is absolutely no reason why specialist lending shouldn’t be considered, especially when it helps to keep brokers and clients in the game.
Specialist lending is still a minefield for many brokers, with some feeling that they do not know the market well enough to deal with lenders directly, or confidently advise clients. Specialist distributors or master brokers, such as Brightstar, provide assistance for brokers who want to ensure they have covered all bases for the client, whilst acting as a source to help them become better acquainted with the alternative funding sources which they can access directly.
The future of specialist lending
Due to its continued growth and increase in demand, specialist lending is becoming more and more mainstream highlighting why this side of lending should never be forgotten or frowned upon. I believe specialist lending does not require a change in perception because it is ‘specialist’ and is a crucial part of today’s lending landscape. It seeks to fill a void left by the big established banks and helps brokers to identify and place specialist cases, and I am confident it will take an ever larger share of the mortgage market in the coming years. Brokers should therefore seriously consider having a specialist distributor in their arsenal to help them find a solution for their clients whenever they need it.