Specialist Finance

Why Brokers Don’t Need to Fear the Words “Unregulated Finance”

One common concern in bespoke lending is that certain products fall outside of the regulator’s scope. This is understandable; the term “unregulated” can create the perception of something unreliable or unsafe.

But, when it comes to property finance, being regulated simply means a lender is serving one type of borrower over another. Regulated loans (residential mortgages being the obvious example) are issued to people who will be living in the property they’re buying with the funds.

Meanwhile, unregulated loans are only used for investment purposes. The borrower cannot live in the property they’re investing in. It must be rented out, sold on for profit, or otherwise used purely for business purposes.

Generally, the FCA regulates financial products and instruments that it deems to be consumer focused, rather than business centric. Regulated products come with consumer-based protections that aren’t available with bridging loans and the like. But that doesn’t mean specialist finance solutions are inherently illegitimate.

In fact, many bespoke lenders voluntarily adhere to industry best-practices, and partner with governing bodies to ensure the integrity of the sector is upheld. Examples of these bodies include the NACFB^[7], FIBA^[8], BDLA^[9], IMLA^[10], and UK Finance^[11]. Market Financial Solutions is a member of all these organisations.

Residential BTL Mortgages

Specialist residential BTL mortgages are different to their mainstream counterparts. Generally, our specialist BTL mortgages were designed to bring bridging like speed and flexibility to the rental market.

Unlike many high street BTL products, specialist BTL mortgages tend to be more open to borrowers in unique or challenging circumstances. Our residential BTL loans, for instance, are open to first-time landlords, borrowers with multiple income sources, unique ownership structures such as SPVs or share purchase agreements, and foreign nationals. All of these are likely to struggle on the high street.

We understand that dealing with these kinds of scenarios and/or borrowers can be intimidating for a broker new to the specialist market. To help with this, we have made efforts to provide more streamlined options for “vanilla” cases.

Brokers new to the industry, or who solely work with run-of-the-mill residential landlords, can ease into specialist finance with our Core BTL offering. Our Core BTL products are for residential properties and standard Assured Shorthold Tenancies (ASTs) only, and are centred around simplicity and ease-of-access for landlords.

As brokers get to grips with a BTL Core mortgage, and realise that specialist finance can offer plenty for entrepreneurial investors, they may then feel more confident engaging with our more robust options. It should be noted that just as is the case with our bridging loans, our BTL mortgages are also underwritten from day one of an enquiry.

Market Financial Solutions’ range of “specialist” BTL mortgages are there for brokers in need of support for foreign national borrowers, investments in holiday lets, or borrowers who have bankruptcies in their backgrounds.

Development Finance

A few different forms of financial products and projects fall under the development finance umbrella. There is light development finance, which typically goes towards standard refurbishment projects. This can include kitchen remodels, interior tweaks, or electrical upgrades.

Then there is heavy development finance. This is funding put towards more large-scale projects such as structural alterations, conversions, or major extensions. Market Financial Solutions can provide tailored funding for both light and heavy projects.

Generally, specialist finance is better suited to help with development projects than standard BTL mortgages are, as mainstream products are typically designed for already finished, rentable properties. For those brokers who are familiar with the typical BTL world, but feel bridging doesn’t fit, our bespoke BTL mortgages can offer the best of both worlds. Our residential BTL mortgage products allow for refurbishment on a remortgage where the landlord is between tenants, as well as a purchase. This means landlords can get to work on their upgrades, without the need for a bridging facility. This is possible due to rolled and deferred interest options.

Also, while we do not offer ground up development finance, which is used to build entirely new properties, we can provide support for investors aiming to benefit from this corner of the market. Our development exit loans are there for covering existing development finance, and providing borrowers with breathing space to finalise their plans.

Brokers may want to familiarise themselves with these options, given the challenges we’re seeing in the development market. A recent survey revealed that 64% of developers aren’t confident about starting new residential developments over the next 12 months[13]. Any form of support could pay dividends over the coming months.

Understanding the Specialist Finance Process

What allows bespoke lenders to support the more unique areas of the property market is their flexible assessment and underwriting processes. Unlike high street finance providers, bespoke lenders manually underwrite their deals. In practice, this means a dedicated underwriter combs through the details, runs through all the paperwork, and finds ways to make a case work.

There are no automated criteria involved that automatically cut off brokers and borrowers. While Market Financial Solutions does have certain minimum requirements (borrowers must be at least 21 years old, for example), we embrace a common sense first approach. If a borrower missed a repayment once 10 years ago, it does not mean they will undoubtedly fail in any property investment endeavour going forward.

Tools to Boost the Max. Loan Amount

Furthermore, the affordability tools we have at our disposal can assist with keeping an investment moving smoothly. In fact, we have tools available that many brokers may never have come across in mainstream finance, but nevertheless could help them greatly.

This primarily concerns three main tools we have at our disposal: rolled-up interest, deferred interest, and top slicing. All can make our specialist finance options more affordable for borrowers.

With rolled up interest, borrowers pay no interest between one and nine months of a loan, and the accrued interest is paid at redemption. In practice, this can give landlords time to find a tenant, carry out light renovations, improve their EPC, or borrow more.

Take a Market Financial Solutions’ residential, fixed-rate BTL mortgage. The minimum ICR for a 2-year fixed mortgage is currently 125%. A borrower may apply for a loan of £500,000 with a 5% interest rate.

To meet the required ICR minimum, they’d need to generate £31,250 in rental income from the property. But, the borrower in question can only generate £25,000 in income. This isn’t enough, but rolled-up interest could make the deal work.

With it, the borrower could cover our funding using only £20,000 from their rental income, and roll up the remaining £5,000. Over the 2-year fixed period, the rolled-up interest would allow the borrower to hit our 125% ICR minimum.

With deferred interest, borrowers can delay covering the interest on their loan for a certain amount of time. We retain the deferred interest, deducting it from the gross loan amount to ensure that the LTV does not become too high.

Deferred interest can free up cash flow during the deferral period. This can allow borrowers to enhance their assets, and make them more appealing for renters. This option can also boost an ICR, as we compare the reduced interest payments to the rent.

Finally, there’s top slicing. Hard to find on the high street, we can offer it to borrowers in need of a bit of a boost. Top slicing is when a lender factors in a borrower’s surplus personal income to top up any shortfall in the rent needed to secure a loan.

Example

Say a borrower turns to us for capital to purchase a BTL asset. They put their own funds towards the purchase, but are short £150,000, perhaps as a result of awaiting the sale of another property which hasn’t completed yet. However, during the underwriting process, it may come to light that the borrower generates £8,000 a month from their business operations, while their expenses amount to £5,000.

This leaves £3,000 in disposable income, which would likely allow us to take this “top slice” of income to support a larger loan. It’s worth remembering that we can combine top-slicing with rolled or deferred interest to really boost loan sizes.

This optionality can also extend to security structures/preferences. Mainstream lenders primarily (or only) rely on a legal charge over a property title as their security. Meanwhile, bespoke lenders may also consider personal guarantees, charges over company shares, additional security options, and more for their deals – so long as it works for the circumstances at hand.

Different Valuation Types

Furthermore, brokers should familiarise themselves, and get comfortable with different valuation methods. With standard regulated mortgages, open market value (OMV) is the norm. But at Market Financial Solutions, we primarily use 180-day valuations.

This is the estimated sale price achievable within 180 days, and results in a typically lower number than OMV. We use 180-day valuations as they’re better suited for faster sales that are common in the specialist finance world.

Market Financial Solutions, and other bespoke lenders, may also use alternative valuation methods depending on the case. There are vacant possession valuations; where property values are assessed as if they were being sold completely empty, with no tenants, no leases, and no occupancy-related restrictions, regardless of how it is currently occupied. This reflects the value a typical buyer would pay for the property free of any occupants and with immediate availability.

Investment valuations focus on a property’s value based on the rental income it produces, and the yield expected within the market. Gross development valuations look at the expected value of a property after a development or refurbishment.

Because of all these variants, bespoke lenders will require robust and detailed packaging requirements. Brokers should be prepared to gather clear details on the borrower’s background, the property involved, comprehensive financial and legal documentation, and more.

This is a lot for brokers new to the market to wrap their heads around. Fortunately, support is available.

How to Find Borrowers in Need of Specialist Finance

Some brokers may be keen to embrace bespoke lending, but are unsure of how they can find borrowers in need of tailored products, or the lenders who can offer solutions. Fortunately, there are resources available in the market that can allow brokers to build a specialist client base.

To start with, brokers can seek out industry networks. Networks can connect brokers with bespoke lenders, while also providing them with support, infrastructure, and regulatory guidance. There are also mortgage clubs available to brokers, with the main difference between the two being that networks take regulatory responsibility for their members, while mortgage clubs provide access to products and support without taking on that compliance function.

At Market Financial Solutions, we work with several networks, clubs, and packagers. This includes the Mortgage Advice Bureau, Stonebridge, L&G Mortgage Club, SimplyBiz mortgages, and more. It should be noted that some networks don’t allow their members to utilise specialist finance. Brokers will need to ensure they partner with the right organisations for their circumstances.

When it comes to finding specialist customers, brokers can work with, and seek referrals from other professionals across the property landscape. Local accountants, solicitors, and estate agents are likely to come across borrowers in need of bespoke solutions in their day-to-day operations.

The digital world can also be of use. There are countless Facebook groups, property forums, and other websites dedicated to this area. What’s more, brokers can work on their own digital footprint to make sure they’re attracting the right enquiries.

Brokers can create content around specialist finance and share it on their websites and LinkedIn pages. Blogs that are SEO optimised, for example, are likely to be noticed by borrowers searching online for bespoke solutions. If brokers are unsure of where to start with these efforts, they can seek help from marketing consultants or freelancers.

There are also investor communities online that can be scoured by brokers. Examples include the property investors network[17], Property Hub[18], LandlordZONE[19], and Specialist Finance Directory[20].

Then there are in-person opportunities. Throughout the year, there are countless events and exhibitions that are dedicated to bringing all participants of the property investment landscape together. This can range from niche events such as the Premier Property Club[21], and the broader gatherings such as the Finance Professional Show[22].

In some cases, brokers may not even need to seek out entirely new clients. Within their existing client base, some may be in need of bespoke solutions, and maybe don’t even recognise that fact.

Perhaps within a broker’s base there is a person who needs funding for an auction bid quickly, but hasn’t raised it with them. Another may need refurbishment finance for a BTL opportunity, but doesn’t realise that bespoke solutions are out there for this.

Brokers can simply reach out to their borrowers on a fact-finding project to gauge if there’s any opportunities. A survey may help structure the results.

In terms of marketing, there are a few key messages or focus points brokers should focus on. When it comes to targeting specialist finance leads, brokers should recognise the need for speed, the benefits of case-by-case underwriting, and the ability to handle unique cases. Collaborating with lenders who have secured funding lines, access to valuers and legal specialists, and years of experience will also add a level of credibility.

Working With a Bespoke Lender – The Market Financial Solutions Model

Working with a bespoke lender for the first time can be intimidating for brokers. But at Market Financial Solutions, we do everything we can to make the process as smooth as possible. We will respond to all enquiries within four hours, and we have teams based across England and Wales who are experts on their local markets.

What’s more, all our deals are underwritten from day one of an enquiry. We’re adept at deal structuring, and making sure our loans work for the borrower at hand. We follow a five-step underwriting process for our specialist finance, which starts with the enquiry, which can be delivered over the phone, online, or through email.

From here, we will issue indicative terms, which are subject to credit approval and receipt of certain information from the broker. Brokers can speed up this part of the process by making sure they communicate with us effectively, and have all their ducks in a row.

A decision in principle is delivered, which is subject to valuations, due diligence, and other assessments. We do a lot of the heavy lifting on behalf of our brokers, and they’ll have direct access to a dedicated underwriter who can answer any questions they have.

After this, our valuers and solicitors are instructed to act, and commitment fees will be paid. Finally, once all the paperwork has been signed, the loan will be issued, and the commitment fees are refunded. As our underwriting process is so clear, brokers can rest assured that they won’t be hit by any hidden fees.

Add-on Resources

Should brokers want to better understand specialist finance and our role within it before reaching out, we have a range of resources available. Our free-to-use calculators can break down how our loans can work with their circumstances, and allow them to budget ahead of time.

We also have many educational resources available which provide insights on the property market, and how bespoke loans can be utilised. We have guides, blogs, reports, CPD courses, and more. At any point, brokers can reach out to us from these resources to discuss their details with us.

Case Scenarios

To illustrate the widespread utility of specialist finance, let’s explore how it can help with a broad range of circumstances and investment types:

Auction Purchase

A broker represents a first-time property investor buying at auction. The property in question needs refurbishment, and the borrower paid the deposit assuming attaining finance would be easy. But, the two banks they approached both declined. One couldn’t meet the auction house’s 28-day completion deadline.

The other auto-rejected the case because the borrower has an outstanding CCJ. We could still support the deal because we underwrite from day one without tick-box criteria. We’d account for the CCJ by requiring it be cleared before funds are released. What’s more, our fast-bridging finance can meet tight auction timelines.

Refurbishment Project

Off the back of the recent staycation boom, a property investor turns to us for support for an opportunity in what’s deemed to be the next Cornwall[23]. The existing owner of a beachfront HMO in the area is keen to sell quickly as they are moving overseas. The HMO is priced relatively cheaply for the area, given it has been left vacant for some time, and is in need of a bit of TLC. With timing being an issue, we could hit two birds with one stone.

We could deliver capital within mere days, which would allow the borrower to both purchase the asset, and renovate it so it’s better suited for the short-stay rental market. On the latter, we would make sure we received a schedule of works so we could see exactly how our funding would be utilised.

Owner-Occupier Commercial Property

A small manufacturing firm outgrows its rented workshop and finds a nearby warehouse that’s ideal for long-term operations. The property is in good condition, but the seller wants certainty and a fast close within 20 days.

The business’s accounts show strong recent growth, yet the initial mainstream bank that the broker involved approached can’t hit the deadline, and is cautious about the borrower’s plans to expand in a difficult commercial landscape. We, however, could provide a short-term owner-occupier commercial facility by assessing the current contracts and cashflow, and factoring in the borrower’s specific credentials.

Seeing they could likely weather any industry-specific issues, and with evidenced plans to move onto a long-term commercial mortgage for the exit strategy, we’d be comfortable in delivering specialist finance.

Residential BTL

Even seemingly straightforward investments could benefit from specialist finance. A broker is working on a deal that involves an experienced landlord buying a single-let terraced house in a prime market to add to an existing portfolio BTL portfolio. However, the borrower needs higher leverage to preserve capital for an oncoming deal, and cover various acquisition costs such as stamp duty.

To accommodate this, we could utilise our “Core BTL” offering. This offering is solely available to more “standard” BTL investments, and we would utilise the property’s open market valuation as opposed to the standard 180-day valuation to maximise the available LTV, and reduce friction.

Foreign National

Foreign nationals investing in the UK property market often struggle to secure flexible high-street finance, but we’re open to overseas borrowers, even those without a UK footprint on some products.

For example, a foreign national may find their refurbishment is running over schedule near the end of the term, while their current lender refuses an extension. They come to us for a refinance so they can finish the works before the existing facility matures.

We’d act fast to beat the deadline, instructing valuers and solicitors immediately. To hasten the underwriting, we’d work with the borrower’s team to confirm completion timelines and ensure the schedule aligns with their exit strategy.

Portfolio Consolidation

We pride ourselves on being able to help property investors adapt to the wider market on a dime. Say a landlord has three properties in their portfolio with outstanding mortgages of £500,000, £300,000, and £200,000. The latest base rate vote pushed it down, and so the borrower wants to consolidate all these into a single £1m mortgage with better terms.

They find a bank that can accommodate this, but they’re informed it will take up to three months to complete. The issue here is that the existing mortgage deals are close to expiring, meaning the borrower could face high variable rate costs as the bank does its due diligence.

To avoid this, we could deliver a bridging loan that would pay off all three of the mortgages immediately, and avoid the higher costs. Also, to help with affordability while they’re utilising the bridging loan, they could roll up the monthly payments and cover everything at the end of the term.

Market Insights: The Growth of Specialist Finance

Demand for specialist finance solutions has ramped up in recent years, and shows few signs of slowing down. According to the BDLA, completions totalled £2.5bn in Q3 2025, a 9.6% jump on Q2, and 42% higher than the same period a year prior. What’s more, applications grew to £11.4bn, and the total value of lender loan books grew to a record £13.7bn[24].

A few key economic shifts have contributed to this. Following the pandemic, stamp duty cuts led to a surge in bridging applications as buyers attempted to snap up properties before the opportunity was lost[25]. After this, the 2022 mini-budget fallout forced many mainstream lenders to withdraw products from the market[26], requiring bespoke lenders to pick up the slack.

These events also fed into a cost-of-living crisis, which we are still struggling against today. Inflation peaked at 11.1% in October 2022 and as of writing, the CPI is still above its 2% target[27]. With costs mounting, many property investors have sought affordable options in the auction scene[28], and by investing in fixer-uppers[29]– pushing demand for auction and refurbishment finance in the process.

Specifically, recent data shows bridging loans are primarily used for investment purchases (20%), chain breaks (18%), and rebridging finance, heavy refurbishment, and regulated refinance (12% each[30]).

Then there is the macroeconomic picture. In recent years, global conflicts and political uncertainties have forced global investors to seek stability wherever they could find it. The UK property market, for all its apparent weakness, has proven to be a safe haven for overseas buyers from America[31], India[32], China[33], and beyond. Generally, foreign nationals are unlikely to get very far with high street banks, but can see real inroads with bespoke lenders.

The Outlook

Looking ahead, the specialist finance market is set to see continued demand for new and emerging areas. Self-build specialist finance demand is rising in the face of a tightening housing supply[34]. More borrowers are seeking green home loans to improve their assets and make them more environmentally friendly[35]. Also, as more landlords professionalise, there is a growing need for specific limited company funding[36].

Then there are those who will end up needing to turn to bespoke lenders out of necessity. The latest Pepper Money Specialist Lending Study[37] found that 9.26m adults in the UK have experienced adverse credit within the last three years. Of those, 8.21 million have missed a credit payment, which will make it harder to get funding on the high street.

Indeed, 30% of people with adverse credit who are planning to buy a property in the next 12 months intend to use a bespoke lender to do so, compared to 26% last year. Brokers should ready themselves, and get to grips with specialist finance now.

FAQs

Is specialist finance more expensive than mainstream finance?

Every specialist finance deal is dependent on the underlying circumstances. A borrower with a riskier set up or missed payments in their backgrounds will likely face higher rates and terms than someone with a clean profile. Generally, though, bespoke loans will be more expensive than their high street counterparts, given the nature of the market and the risks involved. It should be noted that bespoke loans tend to be short-term in nature, and borrowers will exit them quickly, which should limit how high the costs can go.

What’s the difference between gross loan amount and net loan amount?

In specialist finance, the gross loan amount is what’s owed at the end of the term, including additional costs, fees, and interest. The net loan amount is what is lent to borrowers after all applicable costs have been deducted. So, let’s say a lender offers a gross loan of £500,000. After a 2% arrangement fee and other costs are applied, the net loan amount would be £490,000.

Does specialist finance require more paperwork?

As bespoke lenders tend to work with more unique borrowers and circumstances than mainstream lenders do, they tend to require more detailed documentation. This is why we underwrite from day one of a loan. By gathering all the necessary paperwork from the get-go, we can cut down the processing time.

How long do completions take?

This will depend on the underlying borrower, and their broker. Those who have their affairs in order are likely to benefit from quick completion times. On average, we find that most of our specialist finance deals are wrapped up within a few weeks. But where everything lines up and we work with communicative brokers, we can have funding delivered in mere days.

Can first-time landlords apply?

Yes, unlike mainstream lenders, bespoke lenders are happy to hear from brokers representing first-time landlords. Our loans are primarily assessed on the security property as opposed to the borrower’s income situation, meaning first-time landlords are less likely to be held back by their lack of experience.

What’s the difference between regulated and unregulated lending?

The main difference between the two is that regulated loans are primarily used by consumers who are buying their own homes, whereas unregulated loans are used by investors. Regulated loans are subject to stricter regulations and rules designed to protect consumers. Unregulated loans face fewer restrictions, and can therefore be delivered much more quickly.

What counts as a complex borrower?

Different bespoke lenders will have their own definitions and risk tolerances. A “complex” borrower for one lender may be “run-of-the-mill” for another. Generally, a complex borrower can be defined as someone whose profile falls outside the rigid criteria set by mainstream providers. Examples can include foreign nationals, those investing via unique corporate set ups, the self-employed, or those with credit history issues.

Do I need a packager?

No, at Market Financial Solutions we are happy to hear from brokers directly. But, working with packagers, clubs, or networks can prove beneficial.

Conclusion

Specialist finance is no longer the niche market it once was. We as bespoke lenders are at the forefront of the industry, increasingly being seen as the go-to option for brokers and borrowers. At Market Financial Solutions, we have poured our efforts into our resources being as accessible as possible for our existing brokers, as well as new clients.

We know the potential of our field, and we want our brokers to benefit from it. Those who only stick with what they know are limiting their potential. By diversifying and embracing specialist finance, brokers can open up new revenue streams, access entirely new property sectors, and work with more borrowers.

Still, we understand hesitancies may linger, especially for those who have never engaged with the specialist market. But we encourage these brokers to give us a shot. There are countless ways in which we can support their cases, and the teams at Market Financial Solutions are a helpful bunch. Our educational materials and courses can answer any questions brokers may have, while our underwriters and BDMs can confidently place cases across the property investment spectrum.

We have the tools, professionals, and products at the ready to assist brokers with their clients. We hope to hear from them soon.