Jacqueline Dewey is Managing Director of Smart Money People
We now live in a world where people have much more complex incomes and financial backgrounds than before, and so at Smart Money People we wanted to ask brokers what innovations they think lenders should consider to better serve their clients. .
The results form part of our recent Mortgage Lender Benchmark, a semi-annual report on the UK mortgage market.
What does a good BDM contact look like in 2022 and beyond?
More help for self-employed customers
Mortgages for the self-employed are particularly important to brokers and comments on mortgages for these clients accounted for 13% of responses in our H2 2021 Mortgage Lenders Benchmark.
However, it is clear that brokers feel that getting a mortgage as a self-employed person is not without its challenges, particularly considering the difference they perceive between the treatment faced by employed customers and the self-employed, with brokers claiming the treatment is “unfair”. » and the independents are « discriminated against » and even « punished ».
Brokers also expressed frustration with the complex criteria involved in finding a lender for an independent client, and many brokers said they would like lenders to consider one-year accounts in the process. subscription.
“The independents could be better served. The majority want two-year-old books while employees just need a work contract and haven’t necessarily started working to get a mortgage – kidding.
“If the loan to value (LTV) ratio is low, a common sense approach would be appreciated. It comes down to cost however, a payslip takes 10 seconds to review…”
“The self-employed criteria are very complex and difficult to understand at the moment.”
“The self-employed are insured as if they were not lepers – a level playing field between employees and the self-employed.”
Higher LTVs and more help for adverse credit customers
Customers with less than perfect credit scores are another area where brokers believe lenders could do more. The main demand from brokers was to see lenders introduce more high LTV products for their opposing clients.
The brokers also felt that lenders should be able to tell the difference between customers who had a “minor problem” on their credit report and those with more serious credit problems.
“More support for customers with compromised credit, because going forward there are bound to be a lot of people struggling financially due to COVID.”
“Adversarial customers are currently struggling with a lack of high LTV products”
“Ability to discern between free credit abuse and genuine difficulties.”
Greater flexibility in the mortgage loan
When asked what brokers would like to see lenders introduce, features that would give their clients greater flexibility over the life of their mortgage were a popular choice.
Within this, the ability to make larger or more flexible overpayments over the initial term was identified as a desirable addition, as was the introduction of a pre-approved drawdown facility, replacing the need for a full subscription when requesting a new advance. .
Changes to the prepayment charge (ERC) were another feature that brokers would like to see introduced to give their clients greater flexibility, with several brokers asking for more fixed products that did not offer a prepayment charge.
“There are no longer any ERC products available to allow customers to change as circumstances dictate.”
“Flexible features – overpay and borrow at plan rate – remember the A&L flexible mortgage – it was very popular!”
More help for first-time buyers
It was no surprise to us at Smart Money People that brokers would like to see more support and help from lenders to get their first time buyers onto the housing ladder.
Brokers have a wide range of suggestions for lenders and perhaps the regulator to consider, including consideration of proof of rent payments for affordability, a 100% mortgage return, and deposits gifted by the lender.
Several brokers have also suggested making more 95% LTV products available on new-build properties, as well as more products offering cross-generational assistance, including guarantor products and more single-owner, joint-borrower products.
“JBSP seems to be an upcoming question that I get a lot, but not a lot from lenders like this.”
“Affordability. When I can prove that a client has paid more rent for years without defaulting and I can get them a mortgage at a lower, but not affordable price. »
There is no doubt that loan options for the self-employed, people with bad credit and first-time buyers are improving and more and more lenders are improving their criteria and standardizing their offers after the last two years of the pandemic. . However, it’s clear there’s still some way to go, so let’s see what the rest of 2022 has in store for us.