The Intermediary – September 2026 - Flipbook - Page 60
SPECIALIST FINANCE
Opinion
Central to the
future of lending
A
s working paerns
change, incomes
become more varied
and affordability
pressures continue,
specialist lending is
moving from the margins into the
mainstream.
Pepper Money’s Specialist Lending
Study 2025/26 shows that 30% of UK
adults – 16.6 million people – have
experienced adverse credit at some
point in their lives, the highest figure
recorded by the study to date.
Many customers no longer fit neatly
into conventional underwriting – selfemployed professionals, contractors,
customers with multiple income
streams, first-time buyers relying
on family support and borrowers
with historical credit issues. These
borrowers are not higher risk by
default; they oen simply need a more
rounded assessment.
Self-employed customers
Pepper Money’s research found
that 300,000 self-employed adults
with adverse credit expect to be in
a financial position to buy a home
within three years, while 80% of
self-employed respondents aspire to
homeownership. Yet 76% believe their
employment status makes it harder to
secure a mortgage.
Traditional affordability models
may struggle to reflect the realities
of modern entrepreneurship. By
considering the most recent year’s
trading figures and assessing salary
alongside a share of net profit or
dividends where appropriate, lenders
can gain a more accurate picture. The
result is a lending approach more
aligned with today’s workforce, while
still supporting responsible risk
management.
Bonuses, overtime, commission,
second jobs and allowances are no
longer occasional extras for many
households; they are oen an
important part of how people manage
58
The Intermediary | September 2026
their finances. Pepper Money’s
research highlights this shi, with one
in 10 UK adults having started a side
hustle in response to financial stress
and one in 20 taking on additional
employment to manage rising costs.
That makes flexible, evidence-led
underwriting increasingly important.
First-time and remortgage
High property prices, elevated living
costs and the challenge of saving for
a deposit mean flexibility has rarely
been more important. Gied deposits,
concessionary purchases, shared
ownership and longer mortgage
terms can help create practical routes
onto the property ladder without
compromising responsible lending.
The value of specialist lending is
equally clear for customers looking
to remortgage, as well as those
with historical credit events. A
county court judgment, default or
missed payment can tell only part
of a customer’s financial story. We
found that 66% of people who have
experienced adverse credit in the last
six months believe it will negatively
affect their ability to get a mortgage,
rising to 71% among Gen Z.
Many borrowers have experienced
temporary setbacks but have since
demonstrated stronger financial
management and affordability.
Looking beyond isolated credit events
enables lenders to make beerinformed decisions.
Underwriting expertise
Technology has transformed
the mortgage process. However,
technology alone cannot always
capture the complexity of modern
borrowing. Individual underwriting
allows lenders to understand the
context behind the numbers and assess
each application on its own merits.
For example, a self-employed
customer whose business has grown
significantly in the latest trading year
may have a stronger affordability
RYAN BRAILSFORD
is distribution director
at Pepper Money
position than an average of historical
income suggests. A customer with
regular overtime or commission may
be able to demonstrate sustainable
income that is not fully reflected
in a basic salary. A first-time buyer
using a gied deposit, or a customer
with a past credit issue that has since
been resolved, may still represent a
responsible lending opportunity.
The service differentiator
Brokers dealing with complex cases
need confidence that decisions will
be made consistently, communicated
clearly and delivered quickly. Pepper
Money found that only 47% of those
with adverse credit who plan to buy
in the next 12 months say they intend
to consult a broker, and just 46% are
aware that some mortgage lenders are
available exclusively through brokers.
Looking ahead, the specialist
mortgage sector is likely to become
even more important. The Specialist
Lending Study shows that 43% of
respondents with adverse credit have
heard the term ‘specialist mortgage
lender’, up slightly from 42% the
previous year.
Demographic change, evolving
working paerns, affordability
pressures and growing financial
complexity all point in the same
direction: demand for lending
solutions that are more flexible, more
personalised and more responsive to
real borrower circumstances.
Specialist lending is no longer
simply about serving niche segments.
It recognises the diversity of modern
borrowers and creates solutions that
reflect how people live, work and
manage their finances. It will play a
defining role in helping more people
access homeownership, and shaping
the future of the industry itself. ●
