Specialist Mortgages: Everything You Need to Know
On this page:
- What are specialist mortgages?
- Different types of specialist mortgages
- Why do you need a specialist mortgage?
- How to get a specialist mortgage?
- All specialist mortgage articles
What are Specialist Mortgages?
Specialist mortgages are tailored financial products designed to meet the specific needs of individuals or businesses that may not qualify for traditional mortgage products. These mortgage products are developed to address unique personal circumstances or property types that fall outside the standard lending criteria.
Types of Specialist Mortgages
- Self-Employed mortgages: For individuals with irregular income or those who are self-employed.
- Buy-to-Let mortgages: Specifically for those looking to purchase property to build up a rental income portfolio.
- Adverse credit mortgages: Geared towards individuals with less than perfect credit history.
- Expat mortgages: For UK citizens living and working abroad looking to invest in property in the UK or remortgage the existing property they have in the UK.
- Complex income mortgages: Tailored for those with complex income structures, such as bonuses, commissions, or multiple income sources.
Specialist Buy-to-Let Mortgages:
- Holiday let properties: Individuals looking to finance properties intended for short-term holiday rentals.
- Houses in multiple occupation (HMOs): Properties designed for multiple tenants require specialised financing for HMO buy-to-let arrangements.
Specialist Residential Mortgages:
- Age restrictions: Older borrowers who may face age restrictions on standard mortgages but require financing for residential properties.
- Lifetime mortgages: Individuals interested in lifetime mortgages or equity release for residential properties.
- Unique property features: Homes with unique features that may not be easily appraised using standard methods.
- Self-Build properties: Individuals planning to self-build their homes may require specialist financing tailored to the construction process.
- Renovation projects: Properties in need of significant renovation where standard mortgages may not be sufficient.
- Stage payment mortgages: Financing options that accommodate stage payments during the construction or renovation process.
*Please note that I do not advise on equity release; however, I can introduce you to an equity release adviser*
Overall Complex Property Situations:
- Non-standard tenure: Properties with non-standard forms of tenure, such as short lease properties with unusual terms.
- Mixed-use properties: Individuals looking to finance properties with a mix of residential and commercial uses.
- Large or high-value properties: Financing options for large or high-value properties that may not fit standard mortgage criteria.
Why Do You Need a Specialist Mortgage?
Specialist mortgages are designed to address specific financial circumstances that may fall outside the criteria of traditional lending. Whether you are self-employed, have adverse credit, or are seeking unique lending solutions, specialist mortgages offer tailored options to suit your requirements.
- Self-employed individuals: Entrepreneurs with fluctuating incomes or irregular payment structures. Small business owners are seeking mortgage solutions based on business profits.
- Freelancers and contractors: Individuals with income derived from freelancing or contract work.Those who receive income from multiple clients or projects.
- Commission based earners: Sales professionals and real estate agents who earn a significant portion of their income through commissions. Employees with variable bonus structures.
- Investors with diverse income sources: Individuals with income generated from various investments, such as dividends, stocks, and rental properties.
- Company directors: Directors of limited companies or partnerships with complex income structures.
- History of late payments: Individuals with a history of occasional late payments on credit accounts.
- Previous defaults or arrears: Borrowers who have experienced defaults or arrears on loans or credit cards in the past.
- Bankruptcies or individual voluntary arrangements (IVAs): Individuals who have undergone bankruptcy or entered into IVAs.
- County court judgments (CCJs): Borrowers with CCJs on their credit reports.
- High levels of existing debt: Individuals with a significant amount of existing debt.
- Low credit score: Borrowers with a credit score below the threshold required for conventional mortgages.
- Financial rehabilitation: Individuals who have taken steps to improve their credit but still face challenges in obtaining a standard mortgage.
- Unique income sources: Expatriates often have income earned in foreign currencies, which can pose challenges with traditional income verification processes.
- Limited UK credit history: Expats may have limited or no credit history in the UK, making it difficult to meet the standard credit criteria for conventional mortgages.
- International employment contracts: Employment contracts for expatriates might differ from standard UK contracts, requiring specialised consideration during the mortgage application process.
- Currency exchange considerations: Expats may face currency exchange fluctuations, impacting their ability to meet mortgage repayment obligations.
- Specialised expat mortgage products: Specialist mortgages designed for expatriates consider the unique financial circumstances of individuals living and working abroad.
Foreign nationals living on visas in the UK:
- Temporary residency status: Individuals on visas may have temporary residency status, which can affect their eligibility for standard mortgages.
- Visa expiry concerns: Lenders may be cautious if a mortgage applicant’s visa is set to expire during the mortgage term, impacting their ability to repay the loan.
- Limited employment history in the UK: Recent immigrants may have a limited employment history in the UK, which can be a factor in traditional mortgage assessments.
- Visa restrictions on property ownership: Certain visa types may have restrictions on property ownership, requiring careful consideration during the mortgage application process.
- Specialist mortgage products for Visa holders: Specialist mortgages for individuals on visas consider the unique challenges and requirements associated with temporary residency.
- Visa renewal considerations: Lenders offering specialist mortgages for visa holders may take into account the likelihood of visa renewal and its impact on mortgage repayment stability.
These bullet points highlight the specific challenges that expatriates and individuals on visas may face when seeking a mortgage in the UK. Specialist mortgage products tailored to their unique circumstances can offer viable solutions to help them achieve their homeownership goals.
These bullet points highlight the diverse scenarios where individuals may encounter challenges with standard mortgages and may benefit from seeking a specialist mortgage tailored to their specific financial circumstances.
Here are bullet points outlining property-related reasons why people may need a specialist mortgage:
- Investment Properties: Individuals are looking to purchase properties as investments for rental income or capital appreciation.
- Portfolio financing: Investors with a portfolio of multiple properties may require specialised financing solutions.
- Different eligibility criteria: Lenders often have specific criteria for buy-to-let mortgages, including considerations for rental income.
Unusual or Non-Standard Properties:
- Listed buildings: Individuals interested in purchasing or refinancing listed buildings which may have unique eligibility criteria.
- Non-standard construction: Properties with unconventional construction materials or methods that may not meet standard mortgage criteria.
- Converted properties: Individuals are looking to finance properties that were originally designed for a different purpose (e.g., barn conversions).
- Short leases: Flats with less than 80 years of remaining lease get difficult to mortgage.
- Studio flats: Most lenders usually have a minimum floor size to accept small studio flats.
- Day 1 remortgage: You may have bought the property less than six months ago, which makes it difficult to remortgage, particularly on the market value.
- Multi-unit freehold block: You may have a block of flats under one freehold, which needs a specialist mortgage as not all lenders lend on these types of properties.
- Ex-local authority flats
- Flats above commercial
- Semi commercial properties
- Share purchase of SPV
These points address various personal and property-related scenarios where individuals may need a specialist mortgage to accommodate unique features, purposes, or challenges associated with the property they intend to finance.
How to get a specialist mortgage?
Using a specialist mortgage broker to apply for a specialist mortgage offers several advantages:
1. Expertise in navigating specialised markets
Specialist mortgage brokers have in-depth knowledge and experience in dealing with unique financial situations. They understand the intricacies of specialised mortgages and can guide you through the process.
2. Access to a network of lenders
Mortgage brokers often have established relationships with a wide network of specialist lenders. This network can provide you with access to a variety of options that may not be readily available to the general public.
Please note that Mortgage Brokers are not able to advise on products which are only available directly from the lender.
3. Customised advice and solutions
A specialist mortgage broker can assess your individual circumstances and provide personalised advice. They can recommend mortgage products that align with your unique financial situation, whether you’re self-employed, have adverse credit, or need financing for a specific property type.
4. Efficient application process
Brokers streamline the application process by helping you prepare the necessary documentation and presenting your case to lenders. This can increase the likelihood of a successful application and reduce the risk of delays.
5. Help you liaise with all parties involved
A good mortgage broker usually serves as a crucial liaison, streamlining communication between all parties involved in the mortgage process. The broker ensures a cohesive and efficient collaboration by acting as a bridge between the borrower, lenders, solicitors, and other professionals. This proactive facilitation helps prevent miscommunications, resolves potential issues swiftly, and fosters a seamless transaction, ultimately saving clients time and minimising stress throughout the mortgage journey.
6. Time and stress savings
Applying for a specialist mortgage can be complex and time-consuming. A broker can handle the details, saving you time and reducing stress. They act as an intermediary between you and the lender, handling communication and paperwork on your behalf.
7. Objective guidance
Brokers provide objective advice and guidance based on your financial needs. They are not tied to any specific lender, allowing them to recommend the most suitable options for your situation.
8. Adaptability to changing circumstances
If your financial circumstances change during the application process, a broker can adapt and explore alternative solutions. This flexibility can be valuable, especially in complex situations.
9. Increased Approval Chances
The expertise of a specialist mortgage broker can increase your chances of approval. They understand the criteria of different lenders and can match you with those most likely to approve your application.
10. Long-term relationship
Building a relationship with a specialist mortgage broker can be beneficial for future financing needs. They can provide ongoing advice and support as your financial situation evolves.
While it’s not mandatory to use a specialist mortgage broker, their expertise and industry knowledge can significantly enhance your mortgage application experience, especially when dealing with unique financial circumstances.