"As the shared ownership market increases in popularity and profile, more borrowers are looking to a variety of brokers to help set them on the path towards homeownership."
Helping first-time buyers get a foot on the property ladder has always been a key focus for Mansfield Building Society. As a longstanding supporter of the shared ownership sector, we understand how this area of the mortgage market is a vital step towards home ownership.
Over the years, we’ve seen more new lenders continuing to enter the sector. This is good news for borrowers as it helps to increase the profile of the shared ownership market and broadens the range of product options available to those looking to buy their first home.
Looking beyond the headline rate
Whilst increased choice and healthy competition is always good news for borrowers, looking beyond the headline rate and digging a little deeper when sourcing a suitable product can help brokers ensure they can still get a good deal for their clients.
This is particularly true in the current economic climate where higher interest rates and increased living costs are stretching the affordability of many borrowers, placing pressure on household budgets. It is also important in situations where an applicant may have experienced a credit blip due to the tougher economic conditions of the last few years.
Recently, Mansfield Building Society has seen an increase in shared ownership applications from individual brokers looking to secure a mortgage for their clients, a reflection of the sectors growing popularity and profile.
In some cases, these clients were struggling to meet the affordability assessment of mainstream lenders, while in others, the applicant had experienced a credit blip such as a missed utility bill payment and were turned down by the lender.
A practical and common-sense approach
In these types of situations, Mansfield works with the brokers to help the borrower secure a shared ownership mortgage by using our flexible and personal approach to underwriting.
This means that each client’s affordability and credit history is considered on its own merit and we can take a more pragmatic view of their circumstances. Our approach can significantly help those who may be struggling to meet the tougher affordability criteria of mainstream lenders because they have a credit default or simply because they have less disposable income.
Whilst all our shared ownership mortgages are backed by our prime credit criteria, we can still cater for those clients who may have a credit blip on their record, such as those who have taken out a debt management plan or experienced a default over 36 months ago or missed a couple of credit card payments in the last 24 months.
Additional support through product design
Alongside our generous prime credit criteria, we design our product proposition to support affordability.
Our product range requires just a 5% deposit of the share and currently has no product fees. The range includes a fixed end-dated product that stresses affordability at the pay rate and we offer the option of a two-year fixed rate product that follows on to a discounted rate to also support stress test affordability.
This approach means that not only is the customer getting fixed repayments for the term of the mortgage, they are also receiving a boost in terms of affordability. Our use of a discounted follow-on rate rather than our Standard Variable Rate (SVR) means that borrowers would expect a lower overall cost for the lifetime of their mortgage.
An opportunity to help more borrowers
As the shared ownership market increases in popularity and profile, more borrowers are looking to a variety of brokers to help set them on the path towards homeownership.
Given the current economic challenges facing many borrowers trying to secure a mortgage, brokers can still find success by working with lenders who are able to balance a flexible and practical approach with affordability needs.
