A Broker’s Guide to Busting Mortgage Barriers for Homebuyers

New research from LendInvest reveals the barriers that keep people from applying for a residential mortgage.

Once seen as a reliable rite of passage, the path to homeownership in the UK is fraught with significant barriers that have fundamentally reshaped the housing market. The lingering economic impacts of COVID – high inflation and cost-of-living increases – have stretched affordability to the max, and down payments seem to be getting ever more elusive.

However, as house prices stabilise and the Bank of England’s recent base rate attempt to jump-start the UK housing market, for many aspiring homebuyers, the barriers to even applying for a mortgage remain. 

Not All Barriers are Economical
New research from LendInvest reveals that for over one-third of potential homebuyers, the fear of getting rejected is the biggest barrier to them applying for a residential mortgage. That figure jumps to 45% of those currently renting. 

The research also found that for 29% of renters, not knowing how to apply for a mortgage was the biggest barrier, while 20% of non-renters also felt the same. 

Additionally 21% said the impact on their credit score was a barrier to applying, and a further 14% said that they don’t believe there was a mortgage product that would suit their needs, which prevents them from starting the mortgage application process. 

The research, conducted by Opinium, surveyed 1,000 UK adults looking to purchase or remortgage a home within the next 5 years, also found that over a third of respondents agreed with the statement “I don’t know what financial products and services are right for me.”

What Brokers Can Do to Help 
The research highlights a significant opportunity for mortgage brokers to bridge the knowledge and confidence gap. Rather than simply being transactional intermediaries, brokers must evolve into trusted advisors, educating and empowering clients at every step. This proactive approach can transform the mortgage application process from a daunting ordeal into a clear, manageable journey.

Overcoming the Fear of Rejection
This is a key area where brokers can add immense value.  Brokers who don’t just rely on high street lending and have a deep knowledge of how the specialist lending market works will widen the opportunities for their clients getting an application approved. 

It’s human nature for people to fear what they don’t know, so a broker that communicates the entire process and is completely transparent will alleviate this fear. Brokers have the tools to paint a clear picture of a client’s eligibility before the application is submitted, which can give a client some peace of mind. 

A good broker isn’t just getting deals done; it’s also about helping their clients get on the path to homeownership when an approval doesn’t seem likely. 

Simplifying the Process
The research shows that the complexity of the mortgage application process is a major deterrent. Brokers can demystify this by providing a clear, step-by-step roadmap of the entire process. This should include an explanation of the required documentation, key milestones, and a realistic timeline. 

This is where the personability of a good broker comes into play: use plain language to avoid jargon, and offering resources like checklists or simple guides can make a world of difference. 
For those with a fear of the unknown, this transparency builds trust and reduces anxiety.

Protecting Credit Scores
The fear of a negative impact on a credit score is a legitimate concern, and that fear originates from borrowers not understanding the process. Brokers should have the expertise to navigate this: they need to do research to ensure that their clients’ criteria fit before the time comes to submit the application and the hard credit check. 

A good broker will use this opportunity to educate and explain in real time the steps they are taking to avoid multiple credit checks and ensuring they are finding the right mortgage “fit” for their client. 

By thoroughly vetting a client's profile first, a broker can recommend the lenders that may be a good fit, thereby avoiding multiple hard inquiries – each of which can slightly lower a credit score – and increasing the likelihood of approval on the first attempt.

Finding the Right Fit
With hundreds of mortgage products on the market, it’s no surprise that many respondents in the research feel overwhelmed. This is where a broker's role as a specialist is indispensable. Brokers that have a deep understanding of the diverse range of mortgage products available, from specialist lenders (like LendInvest) for those with non-traditional income streams to products designed for first-time buyers or the self-employed, are better equipped to support their clients and get them on the path to homeownership.
They can identify niche products that clients would likely never find on their own, ensuring that even those with unique circumstances can access the finance they need.

By focusing on education, trust, and tailored guidance, brokers can do more than just facilitate a transaction; they can become the catalysts that turn a dream of homeownership into a reality for the thousands of people currently sitting on the sidelines.

<sup>LendInvest plc is a public limited company registered in England and Wales (No. 8146929). Registered
Office: 4-8 Maple Street, London, W1T 5HD.

LendInvest Mortgages and LI Mortgages are registered trading names of LendInvest Loans Limited. LendInvest Loans Limited is authorised and regulated by the Financial Conduct Authority (FRN:737073). LendInvest Loans Limited is a company registered in England & Wales (Company No. 09971600) and is a wholly owned subsidiary of LendInvest plc.

Regulated lending is provided via LendInvest Loans Limited (Company No. 09971600). Unregulated lending is provided by LendInvest BTL Limited (Company No. 10845703) and LendInvest Bridge Limited (Company No. 11651573), which are wholly owned subsidiaries of LendInvest plc.</sup>