Innovation in the Mortgage Industry


The mortgage market is not the place where we see an awful lot of innovation. The basic way a mortgage works has been the same for years, and to be honest, there is not much you can do to change the way it works. A lender lends you money, it is secured against your property, and you pay it back over time, simple really.

However, there are always issues that crop up in certain circumstances, which require a bit of lateral thinking to resolve them and that is where innovation can be possible. We are not talking about re-inventing mortgages but finding new ways to solve problems. Over the last few months a few lenders have been doing this and, although the products they have launched are quite niche, it is good to see.

Many of these issues are around how we help first-time buyers onto the property ladder in terms of both affordability and, especially finding the deposit. We have started to see more use of the “Joint Borrower-Sole Proprietor” mortgage, which enables someone to be named on the mortgage to help with the affordability issue, without becoming an owner of the property.

The other potentially, bigger, issue is around deposits. We have recently seen the launch of 100% mortgage deals for renters who are looking to buy a property, where they can prove affordability through their rental payment history. There has also recently been the launch of a mortgage product, which requires just a £5,000 deposit rather than the traditional percentage-based deposit requirement. This means that a first-time buyer who may have a good income, but is unable to save a large deposit, could buy a property for up to £500,000 with just £5,000 deposit. This certainly will not be a common scenario, but in the right circumstances could help, especially for those looking to buy in expensive areas of the country.

Overall, we welcome the innovations and hope that lenders continue to look at ways to help first-time buyers onto the property ladder as long as they are fully aware of what they are taking on and are not put into unrealistic or unaffordable situations.

Please get in touch with Barlow Irvin Financial Services award-winning team if you need expert mortgage and protection insurance advice.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

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The Barlow Irvin Team

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