Thousands of UK mortgage applicants are facing not only financial barriers but also the mental and emotional strain of being locked out of the mainstream mortgage market. According to new research from specialist lender Together, many borrowers with ‘non-standard’ needs are being rejected due to rigid criteria set by traditional lenders, leaving them feeling judged, stressed and hopeless about their homeownership dreams.
Together’s findings reveal that mortgage acceptance rates remain alarmingly low for applicants who don’t fit the typical profile sought by mainstream banks and building societies. This includes individuals with unique circumstances such as self-employment, age considerations, impaired credit histories or those buying through Government-backed schemes like Shared Ownership.
The numbers are stark: nearly two in five (39%) borrowers attempting to buy via Shared Ownership have had their mortgage applications rejected. Thin or impaired credit history was cited as the reason for rejection by 29%, while 27% were denied due to being over 55 or divorced. A further 22% were turned down because they are self-employed.
EMOTIONAL FALLOUT
Beyond the financial implications, the rejection process takes a significant toll on applicants’ mental health.
A quarter of non-standard applicants reported feeling stressed or upset during the mortgage application process. Among those with thin or impaired credit histories, nearly a quarter (24%) felt judged by lenders. Sleepless nights have affected 12% of this group, rising to 19% for those using schemes like Shared Ownership.
For some, the repeated setbacks have led to abandoning their housing ambitions altogether, with 5% of applicants opting to return to renting instead of pursuing non-standard property purchases.
RIGID LENDING CRITERIA
The rigidity of mainstream lending criteria is a key factor as to why borrowers are struggling. Together’s research highlights that 32% of applicants found the time spent gathering information for their mortgage applications to be a significant challenge, while 17% said meeting the stringent requirements was too difficult or time-consuming. For those with non-standard needs, these hurdles can feel insurmountable.
GROWING MARKET
The demand for solutions to serve underserved borrowers is growing. The specialist lending market is forecast to expand significantly, from £32 billion to £54 billion between 2023 and 2029 – a 70% increase. These lenders assess applicants’ finances on a case-by-case basis, offering tailored solutions that take into account unique circumstances, such as self-employment, atypical properties or occasional financial hiccups caused by the cost-of-living crisis.
WAY FORWARD
Specialist lenders provide a much-needed lifeline for borrowers who don’t fit the conventional mold.
By treating each case individually, they offer hope and options for people pursuing their property goals. Whether it’s helping a self-employed individual, someone buying a unique home, or a borrower recovering from a missed payment, these lenders are proving that flexibility and understanding can make a world of difference in achieving homeownership dreams.
Ryan Etchells, Chief Commercial Officer at Together, says: “Life and work as we’ve known it is evolving and there are now more of us who don’t comply with the ‘one size fits all’ lending methods of what worked for previous generations.
“And, while it’s positive that the proportion of those rejected for a mortgage has fallen over the last five years, challenges remain, and the emotional toll is still of great concern.
“In order to support more people with their property ambitions, we need to work in step with the wider industry to make the application process as seamless as possible, and continue to challenge the outdated systems, processes and stereotypes which are responsible for many of the access barriers that exist.
“Chancellor Rachel Reeves’ Budget in October saw the important task of cementing plans for the Affordable Homes Schemes and house-building efforts from next year.
“But what’s missing is Government intervention at industry level to reassess exactly how to bridge the issue of affordability and home ownership in the UK whilst specialist lenders look to continue to support those that are locked out of home ownership by a broken mainstream mortgage market.”
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. We normally charge a fee for our services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but our standard fee is £549. Complex cases usually attract a higher fee. We will discuss and agree the fee with you prior to submitting any mortgage application.
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