It’s now almost a year since the Bank of England (BOE) voted to lower the interest rate to 0.25%. This historically low rate has had myriad effects, one of which has been ongoing cheap borrowing. Newspaper headlines have frequently exclaimed about the ‘mortgage rate war’, with big name lenders competing to offer low mortgage rates and the cheapest borrowing.
But are low mortgage rates accessible for all?
This seems like good news for lenders from all walks of life—but despite mortgages costing less than ever, and competition among lenders rife, it’s important to note that most borrowers won’t actually have access to these ‘market leading rates’. Rates as low as 0.99% are only accessible to borrowers with the most vanilla / straightforward cases, healthy deposits, copious amounts of equity and standard income streams.
For example, a self-employed person will struggle to prove affordability due to a short period of accounts, or a doctor will struggle as their income is paid from multiple sources so a steady income stream is difficult to evidence.
These borrowers can more than afford to service a mortgage, but they will have to pay a higher rate simply because they have slightly complex circumstances. Once you have sifted through the very best rates at the top of the pricing charts, it is then a case of finding the cheapest product / lender specific to the actual client’s situation.
So what should you do?
The checks inflicted upon borrowers now mean that even the wealthiest clients are limited in their property financing options, and all this hyperbole about the cheapest ever rates is alienating them from the mainstream market even further.
Unfortunately, there is no way to sidestep this complexity—even with the advent of digital brokers. If you have a complex background, ultimately the best thing you can do is approach a broker with expertise in dealing with clients with non-vanilla income structures. Doing so gives you the opportunity to gain access to non-high street rates—ultimately, headlines rates may look appealing, but you are far more likely to benefit from a bespoke and holistic approach.