Originally written by Timothy Adler on Small Business
OakNorth, the specialist business bank, is to offer mortgages to small business owners and entrepreneurs for the first time.
It believes that SME business owners are under-served by traditional mortgage lenders because they cannot prove regular income. Instead, they are often asset rich with money locked up in their businesses or property.
OakNorth will lend from £500,000 and plans to differentiate itself by offering quick turnarounds on decisions and taking a holistic view of an entrepreneur’s finances. (In exceptional cases, it will lend from £250,000).
It plans to close £260m worth of mortgages by the end of 2019, carving out a 5-10pc share of the £4.3bn residential mortgage market by year-end.
One in 10 business owners in the UK are unable to access the finance they need to purchase their first home, says OakNorth.
The six largest UK banks dominate 77pc of the mortgage market but often find it unviable to create bespoke mortgages for SME business owners. Entrepreneurs who may be asset rich but regular income poor usually find it difficult to pass the high street banks’ lending criteria, as most banks only accept established and regular payments as “income”.
The challenger bank has taken on three veteran