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27 Jul 2020

Specialist mortgages

When we say specialist, we mean mortgages that do not fit high street lenders policy, such as adverse credit, specialist buy to let, bridging finance, secured loans, development etc.

Pepper Money, one of the world’s largest specialist lenders, ordered an independent survey earlier in the year to ascertain the size of the specialist market.

This is a growing area with over £52bn of lending carried out in 2019 a whopping increase of 100% from 2018. This is a testimony to the lenders in the market.

However, the specialist mortgage market is going through its own challenges right now with a reduced number of lenders offering products.

I am pleased to say that we are still seeing support from some lenders even though this is a market that is first to contract during periods of uncertainty.

Adverse credit market

Pepper Money’s research found 7.63 million people in the UK have experienced adverse credit in the last 3 years.

Given the support offered by the government and lenders allowing payment holidays we are thankfully not seeing this situation worsen which is meaning many would be borrowers with historic adverse credit are able to still secure mortgages providing affordability can be evidenced.

This is a mature market with very successful underwriting assessments that I see returning to support under-served borrowers.

We have been working with debt charities to help support their clients and can offer advice where necessary around what is possible / not possible in this market.

Bridging Loans

A bridging loan can be best described as ‘a way to get a deal done’. Using equity in a property to secure the loan AND the interest payments, it is a loan often used in auction finance, development finance or to break chains so that you can move home without selling.

Typically charged at higher rates than standard mortgages due to the increased risk and shorter terms offered.

The market for this type of lending is buoyant. There are still lenders lending and, thankfully, have not increased rates by too much. The best deal offered pre-lockdown was 0.39% a month and now is 0.42% a month.

These lenders are offering up to 75% loan to value but can be often secured against multiple assets. These lenders are seeing an increased number of enquiries due to the lack of high street lending available, providing a lifeline to borrowers with limited options.

Second Charge loans

These can often be referred to as secured loans. They are a loan taken, secured against your home, that ranks as a charge second to that of your mortgage company (as all mortgage companies will want the 1st charge, meaning they get their money first upon sale).

Second charges are often used to borrow further funds when clients don’t want to re-mortgage, possibly because they have favourable rates on their main mortgage or don’t want to pay an early repayment charge.

These loans are also often assessed on more favourable affordability models meaning clients can borrow more than what they could do on a 1st charge mortgage.

Still, a lot of interest in these loans but there simply aren’t the products available to support demand. We are hoping this will change in the next couple of months but this isn’t founded upon anything other than a hunch so we will need to wait to see how this market returns.


When a development project is embarked upon, it is hoped that at the point they are ready to be marketed for sale, the property market is booming. Many developments completed over the past few months were unfortunately not in that ideal position.

Although the level of interest is buoyant right now, without mainstream lenders returning to the market, the buyers of these properties are stuck with them.

We have had discussions with developers about bridging their current deals to be able to move on to their next development or to consider letting their current developments and securing longer time finance. Again running the numbers is what helps determine the best way forward.

Specialist mortgages

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