Specialised lending or specialist lending is a loan secured by an asset that has to perform in order to back the loan. For example, a commercial building can be an asset in a specialised lending. This term is related to the funding of individual projects where the repayment is dependent highly on the performance of the collateral or underlying pool.
After the first half of 2013, competition in the sector of the residential mortgage increased considerably. While principal residential players seem to be creating a competitive and fully functioning marketplace, some lenders extended their appetite into more specialist niches. Specialist lending covers areas as various as secured loan, buy-to-let, shared ownership, complex prime and more.
However, through most specialist sectors, the appetite of lenders grows quickly and they recognise that some types of consumers are not the pariahs of mortgage that seemed to be in the past. Specialist lending targets consumers with unusual employment situations such as those with inconsistent incomes who want to buy non-standards properties. Even consumers with deposits financed by a third party such as builders or consumers with shared ownership can also qualify for a specialist lending.
Specialist lending is rising fast. Last years, levels exceeded £20bn in buy-to-let gross mortgage lending. This is an exceeding up a third on 2012. This year, some data suggest that it can reach £30bn if lenders increase volumes of business in other places such as non-regulated loans. The Loans Warehouse index says that last year, secured loans touched around £500m of lending. The West One index reports that over last year, bridging loans hit £2bn. This numbers are evidence that specialist lending is rising fast. Fitch reported that the levels of non-conforming lending increased last year. This report suggested that most of the consumers who qualified for a specialist landing had equity in their properties and strong affordability checks.
A consumer can ask for a specialist lending if he has a commercial property such as a real estate that can perform in order to pay back the loan according to the term. The lender will assess the property based on its risk. For example, there are some commercial real estates with a specific weight of risk. The grade may vary from lower to high volatility real estate. The way such property can perform will impact on the lending. The lender will calculate the risk weights of these assets.