Mortgage applicants who are unable to access the mainstream market are under mental and emotional strain, research has found.
A study from Together’s Residential Property Market report revealed that more than a tenth – 12% – of non-standard applicants experienced sleepless nights as they tried to get onto the property ladder. This rose to 19% among applicants using schemes such as shared ownership.
Additionally, 14% of non-standard applicants said they felt judged when trying to get a mortgage. This rose to 24% when it came to people with thin or impaired credit.
Others abandoned plans to buy a home altogether, with 5% of people who wanted to purchase a non-standard property, such as a park home, holiday home or property made from concrete or wood, deciding to go back to renting instead.
When asked what the most challenging part of the application process was, 32% said the time spent collecting the needed information and 17% said it was too hard or time-consuming to meet the requirements for a successful application.
As for why their mortgage applications were unsuccessful, 39% said it was because they were buying through shared ownership.
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A further 29% said it was because they had a thin or impaired credit history, while 27% said their application was rejected because they were over the age of 55 or were divorced.
For 22%, their mortgage application was denied because they were self-employed.
However, the prospects for non-standard applicants seem to have improved, as just 7% said they were struggling to obtain mortgage finance, down from 19% when the same study was carried out in 2022.
Ryan Etchells, chief commercial officer at Together, said: “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in step with the wider industry to make the application process as seamless as possible, and continue to challenge the outdated systems, processes and stereotypes [that] are responsible for many of the access barriers that exist.”
He added: “Chancellor Rachel Reeves’ Budget in October saw the important task of cementing plans for the Affordable Homes Schemes and housebuilding 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 homeownership in the UK whilst specialist lenders look to continue to support those that are locked out of homeownership by a broken mainstream mortgage market.”
