Our attorneys advised The Mortgage Lender (TML), a UK specialist lender, on its £250 million financing. The transaction, which closed in mid-July, allows TML to establish an innovative new lending platform to provide potential borrowers with better access to mortgage opportunities.
TML is one of the few mortgage lenders to enter the UK market since the financial crisis, and its unique platform both expands the pool of potential borrowers and the types of mortgage providers available to them.
The existing UK mortgage market predominantly operates through traditional building societies or typical banking mortgages, which favor “prime” borrowers with standard incomes that, in theory, put them at less risk of defaulting. TML’s mortgage-lending platform expands the borrowing pool by serving mortgage seekers who do not fit the standard profile, such as borrowers who are self-employed or contract workers, have multiple sources of income, require lending into retirement, or have an imperfect credit history. This niche base of “prime and near prime” customers who are not well served by the current bank market now have access to lending opportunities. The majority of borrowers will have excellent credit profiles, but seek an alternative to traditional banks; however, a small number of those borrowers may have had some blemishes on their credit history but are still regarded as creditworthy. This is distinct from what used to be termed “sub-prime” and has the potential to expand the mortgage market.
TML’s platform originates mortgages directly into a UK Stock Exchange-listed fund managed by TwentyFour Asset Management. This is an innovative and alternative funding methodology that is challenging the standard bank market.
Given the UK Financial Conduct Authority’s ongoing effort to enhance the recovery of the post-financial-crisis UK mortgage market through a combination of ongoing assessment of regulatory impact, market growth and innovation, and central government-led policy, TML’s platform is a highly anticipated and welcome market innovation..