MortgageGym will be adding four specialist lenders to its platform this year, including Together and Precise Mortgages from the end of May, with Kensington Mortgages and Vida Homeloans from June.
The FCA-regulated mortgage robo-adviser will make these additions as it believes a sizeable minority of mortgage applicants are excluded from mainstream high street lenders.
John Ingram, co-founder of MortgageGym, said: “With the nature of work in Britain having transformed dramatically as traditional employment patterns have shifted and a growing spectrum of life styles emerging, the mortgage industry has not kept up with the times.
“A key driver in this shift has been the emergence of the gig economy, zero-hours contracts, a rise in self-employed and people working longer. Many high street lenders have been slow to adapt to such diverse credit cases and borrowers with irregular income.
“Most mortgage providers’ automated decision-making and rigid criteria mean that many people are locked out of the mortgage market. As a result, an emerging market of specialist lenders has stepped in to meet these needs and now we are bringing these offers to as wide an audience as possible.
“Our aim has always been to create a transparent digital marketplace to match mortgage borrowers with the right mortgage lenders, making the mortgage process smoother and easier.
“We recognise that the modern way of living means that people have different income streams and as such we can now offer tailored advice to everyone with the introduction of specialist lenders and our new eligibility tool.”
Some 39% of MortgageGym’s online users do not meet the criteria of most traditional lenders and have a credit score of 720 or below due to factors outside of their control; for example, many freelance workers will not be able to secure a high street mortgage.
In order to service this growing segment of applicants, the online portal, which combines robo- and live-broker advice, will automatically direct applicants to live brokers that specialise in advising those with lower credit scores for the first time.
The platform will automatically categorise borrowers into one to five credit profile tiers based on live credit data. These brokers will have deep knowledge of the data specialist lenders require in order to approve a mortgage.
This advice will be supplemented by new open banking technology that MortgageGym plans to launch this summer, which will match live data from applicants’ bank accounts to lenders’ internal scorecards.
This will provide applicants with surety that they can 100% afford mortgages offered to them for the first time in the UK.
In a recent YouGov survey commissioned by Together, 54% of mortgage applicants were rejected for lifestyle choices for reasons that many would consider the ‘new normal’.
This includes a low credit score, lack of credit history; too much debt/too many credit applications; their type of employment/income was not suitable, for example, they were self-employed, a contract worker, had a dividend income, were too near retirement age or had insufficient employment history.
Furthermore, 66% of millennials were rejected for reasons identified as being part of the ‘new normal’.
There is a pressing need for first-time buyers and lower income households to build a good credit score to make sure they can access the best mortgage rates.
MortgageGym has found that mortgage applicants with an annual salary of under £20,000 have the worst credit score and consequently face the highest cost of borrowing.
For example, a first-time buyer with a poor credit score could face paying £947.29 per month with a 5.79% 2-year fixed rate. In contrast, a first-time buyer with a strong credit score could pay a mere £608.40 per month with a 1.62% 2-year fixed rate.