How Hodge identify and serve an underserved market    

Launched in August 2024, the Hodge Resi Mortgage has been steadily gaining traction. Designed as a mortgage solution for customers with diverse incomes and in need of a more bespoke approach to lending, the product has been attracting borrowers since the outset.

At Hodge, we understand the uniqueness of everybody’s financial needs and how these will change significantly throughout a person’s life. That’s why our mortgage products are tailored to be as flexible as the lives of our customers and the Hodge Resi Mortgage is no different. Available to clients from age 21, with terms up to 40 years, the Hodge Resi offers mortgage solutions to customer with complex income and affordability needs, regardless of their occupation.

A bespoke product for a unique market

Hodge Resi is tailored for those whose income structures don’t fit the traditional, high-street lending model. It works for people who need a lender to assess their unique situation beyond current basic income, whether they are employed, self-employed or a combination of both.  We created the Hodge Resi to meet these needs:

  • Borrowers with multiple income sources and complex income structures
  • Self-employed individuals with one year’s trading accounts, regardless of LTV, and acceptance of retained profit where required
  • Experienced fixed-term or day-rate contractors with no minimum income requirements
  • Borrowers wanting to use their employed income until age 80
  • Those looking to maximise affordability through enhanced LTI multiples up to 6x joint income
  • Agency and zero-hours workers, including locum doctors and dentists, bank nurses and supply teachers.

At Hodge, we’ve always prided ourselves on finding new and innovative ways to cater for the underserved. We keep our finger on the pulse of the changing lending landscape of income generation and life stages so we can stand apart in our approach to mortgage lending, actively supporting those with more intricate financial circumstances.

Find out more about the Hodge Resi criteria here.

Early market response

As a data driven organisation, we’re always looking to track the trends of the mortgage space, and we do the same for our products and services. Early observations since launch of the Hodge Resi Mortgage, is there has been a range of applicants attracted which provides valuable insight into market demand and customer profiles, aligning to the target market the solution was intended for.

  • Mortgage term trends

Over one-third of applications are for terms of 30 years or more. This points towards a growing trend among borrowers with need to increase borrowing power by stretching terms, rather than focusing on lower monthly payments. UK Finance revealed a 19% growth in lending to first time buyers in the second quarter of 2024, a key driver of this being the trend of longer mortgage terms. Over the last few years, we’ve seen the demand for the traditional 25-year mortgage fade, as more people, especially younger buyers, turn to longer term loans to manage increasing house prices and the unsettled economy.

The Guardian reported that over the last few years almost 20% of first-time buyers are opting for terms of 35 years or more and over a million mortgages taken out extend beyond retirement age.  This aligns with recent market research, which indicates that borrowers are stretching payments out over these longer terms to make monthly payments more manageable and achieve the loan size they need rather than simply manage their costs month-to-month as affordability challenges remain.

This trend reflects the need for flexible mortgage products like the Hodge Resi Mortgage, which accommodates borrowers seeking to maximise affordability through longer terms and complex income assessments. Hodge also offers the flexibility of up to 10% overpayment per annum, without incurring any penalty fees, helping clients potentially shorten their term and pay less interest overall.

  • Loan-to-Value (LTV) patterns

According to Statista, the global data and business intelligence platform, the median loan-to-value (LTV) ratio for mortgages in the UK in 2023 was approximately 69.5 percent. For Hodge Resi, around two-thirds of the applications have been for loans above 80% LTV. This cements the need in the market for a higher LTV products, supporting first-time buyers and young families who are looking to make significant life moves—whether that’s getting a foot on the property ladder or upgrading to a home with more space in family-focused locations.

  • Diverse employment types

We purposefully didn’t include a restrictive list of “acceptable” professions when creating the criteria for the Hodge Resi Mortgage. This opens up opportunities for professionals with complex income structures, regardless of their specialism. As predicted, we’ve seen an influx of applications from those with above-average incomes, including contractors, company directors and those with multiple income sources, showing that Hodge Resi’s flexibility is appealing to a wide demographic.

  • Loan size and affordability

Interestingly, over a third of the applications are for loans exceeding £300K, which not only supports the product’s design but also reflects confidence in how well Hodge Resi is targeting and catering to the right audience.

Early observations since the launch of the Hodge Resi Mortgage have shown a range of applicants, giving us valuable insight into market demand and customer profiles.

Real-life success story

One of our early clients, perfectly illustrates the real-world impact of Hodge Resi. Nia and Aaron were looking to upsize their home but faced challenges in meeting affordability requirements, particularly due to Nia’s nursing profession and Aarons recent switch to a Limited company with less than two years accounts. Many lenders didn’t offer the flexibility they needed.

The Hodge Resi Mortgage was able to take a holistic view of their income, including Nia’s additional income and projected earnings for Aaron’s new business. By extending their 30-year term, they secured the loan needed for their dream home. Read the full Hodge Resi case study. 

Explore more

As the Hodge Resi Mortgage continues to make its mark, we’re excited about the positive impact it’s already having on borrowers who may have otherwise struggled to find a mortgage solution that fits their needs. For more information about the Hodge Resi Mortgage and how it could help your clients, contact your local Hodge business development manager (BDM).