Regulation, legislation and taxation have undeniably contributed to the evolution of the mortgage industry, although most new developments have been a response to changing customer requirements.

This has created much-needed diversity in lending products and enabled advisers to help clients who are unable to satisfy high-street banks’ strict lending criteria or who have more complex mortgage requirements.

However, it presents mortgage professionals with the challenge of handling specialist products on a more regular basis. While generalist advisers will need to consider entering some of these niche areas, being a specialist in every area is an impossible task, especially when each segment of the market is getting progressively more complex.

Later-life lending

Savers are more aware of how difficult it can be to spread their pensions over longer lifetimes, meaning they are attracted by opportunities to boost retirement income. With more than £1.5trn of wealth locked in housing equity for the over-55s, thousands are turning to their homes to provide for later life.

However, the complexities surrounding the various options, such as retirement interest-only products and different types of equity release, create a challenge for advisers to ensure they provide the most accurate and up-to-date advice.

To reflect the growth of this space, the London Institute of Banking & Finance recently changed its equity release qualification. However, many advisers simply do not have the capacity to requalify and so will not hold the most recent information.

First-time challenges

The first-time buyer space has also become more specialist. There are, of course, various government schemes available but, with Help to Buy coming to an end in 2023, the market has responded by diversifying the products on offer.

More lenders are offering 95 per cent LTV products, as well as longer, fixed-term rates. Shared ownership, also popular with younger buyers, has a key role to play in the market and is an area many borrowers require guidance on. Recent predictions by Savills show shared ownership could rise by over 15,000 homes a year, more than twice the number currently being built.

Other alternatives include schemes around the transition from renting to owning, as well as the rise of family mortgages.

Landlord support

Buy-to-let too has experienced major changes over the past few years, with political uncertainty and tax alterations resulting in a steep learning curve for landlords, lenders and advisers.

Whether a borrower is a small or professional portfolio landlord, the space is becoming more complex. Advisers need to stay ahead to support this vital part of the market through the next transition phase.

Choosing referrals

When clients could be best served by using specialist niches that fall outside their adviser’s expertise, one solution is to refer them to a specialist partner. For smaller advice firms in particular, this can be achieved by building local networks with other advisers who specialise in different areas of the market. For example, BTL advisers could look to partner with an equity release specialist to ensure their older clients get the advice they need on lifetime mortgages.

However, building these referral relationships requires advisers to do their own due diligence or even have an agreement in place to ensure customers interested in those product areas are referred. If advisers are unable, or simply do not want, to spend time establishing local networks, another option is to use services like SmartrRefer. This provides a panel of carefully selected specialist master brokers for advisers to refer to.

Advisers should not view a referral as a dereliction of duty but as key to helping their clients, much like a GP would refer patients to a specialist consultant for treatment. Bespoke advice is fast becoming the new normal.

Ensuring clients are treated fairly is every adviser’s priority and, in the increasingly complex world of mortgage lending, an adviser is likely to receive more praise for a sensible referral than for selecting a solution outside their field of expertise.

Craig Hall, head of broker relationships & propositions, L&G Mortgage Club