BestAdvice fires the questions at Sakeeb Zaman, CEO and co-founder of StrideUp.
BestAdvice (BA): StrideUp may not be a name that mortgage brokers are familiar with. What do intermediaries need to know about the business?
Sakeeb Zaman (SK): StrideUp is a residential home finance provider with a Shariah-compliant product to help the UK’s 4 million Muslims.
The mortgage market at the moment doesn’t work for all aspiring homeowners and our products empower brokers reach a new audience. For many Muslims, a normal mortgage doesn’t meet their faith requirements, but with StrideUp they can achieve their property goals with an ethical and Shariah-compliant product. With competitive rates and a flexible approach to underwriting, we aim to be a valued partner to the broker community.
At StrideUp we are looking to do things differently, delivering a fresh perspective and inclusive way of supporting those buyers to achieve their aims.
Alongside our inclusive product design, we employ a flexible approach to underwriting, which means we can judge each case on its individual merits and support those customers who are all too often overlooked by mainstream mortgage lenders.
BA: StrideUp recently made some big changes to its residential criteria for foreign nationals. What led to those changes?
SK: We are well aware that there are many would-be homebuyers who are left excluded from the regular mortgage market, simply because they don’t quite fit within the parameters set out by high street mortgage lenders. One of the big motivations for everyone at StrideUp is delivering a proposition that can open up home ownership to those people, to remove some of those unnecessary hurdles, and that desire was what drove our changes.
For example, there are plenty of foreign nationals who want to purchase a property within the UK but are held back from doing so because of the length of time left on their visa or restrictive LTV requirements. This is particularly an issue for those working in the NHS and other key worker services, given their reliance on foreign workers.
As a result, we have adapted our criteria so that we can accept those with at least one year left on their visa up to 85%. This will open the door to many more foreign national buyers, who are perfectly good prospects for owning a property, but who currently are unable to pass the tests of high street lenders.
BA: You also changed the criteria for self-employed customers. How will these changes impact such customers?
SK: There are millions of people who work for themselves in the UK. While there has been a drop from the heights seen before the pandemic, there are still around 4.2 million self-employed workers, many of whom aspire to own their own home.
As brokers will know only too well, these clients can find it incredibly difficult to secure the financing they need, given the strict terms and criteria implemented by the big-name mortgage lenders.
A good example here is insisting on multiple years of accounts in order to calculate affordability, which can really punish those whose business is on the up, since an average is used to determine what can be afforded.
In recognition of this, StrideUp has changed how we judge applicants who are self- employed so that we now use the most recent year’s income, ensuring that aspirational clients whose businesses are growing are able to obtain the funding they need and can afford.
BA: Many hopeful homeowners rely on financial assistance from loved ones. How does StrideUp handle these sorts of cases?
SK: The ‘Bank of Mum and Dad’ is something of an outdated term, really, with significant numbers of aspiring buyers turning to help from a wider range of loved ones.
One of the realities of the house price growth seen in the UK in recent years is that saving a deposit of 10% or more alone simply isn’t possible, particularly given the other pressures on household budgets at a time of high inflation. As a result, increasing numbers of buyers have to make use of gifted deposits from their loved ones.
That can be easier said than done though, with some high street lenders particularly strict about where that gift can come from, effectively limiting it to only the parents or grandparents. This is out of step with how buyers actually source these deposits though – we know that plenty of potential buyers make use of gifts from a much wider range of family and friends and is why StrideUp will accept gifted deposits from a wide range of sources.
BA: How can brokers add home purchase plans to the product options open to their clients?
SK: It’s important to recognise that brokers require different permissions in order to advise on home purchase plans. Given the number of Muslim borrowers in the UK, some brokers will view this as a sensible addition to their proposition and pursue those additional permissions, but even if you opt against this you can still support borrowers for whom this product might appeal.
With StrideUp for example you can simply refer the client on to us, and we will take on the responsibility for providing compliant advice. This way the broker helps the client secure the finance they need and still receives a procuration fee, meaning an additional income stream without having to add those permissions to their own business whilst still providing a good customer outcome.