The missing link? Who will plug the gap between the High St and specialist lenders? 

The missing link? There seems to be a glaring market share that's gone missing: lenders with products that sit comfortably between the High Street lenders and the double figure rate merchants.

Whilst doing some research last week, I was sat in the uncomfortable position of having to offer double figure rates to a quality couple – who had an ambitious and well thought out business strategy – simply because the High Street just didn't want to know.

Picture this couple, he works for the NHS, she at Barclay's bank, jointly they enjoy an income touching the £60,000 mark and have a quality credit rating, not to mention loads of deposit cash.

Now the couple are looking at a career change and are prepared to go and run a guest house in Newquay. Their business plan is well thought out and very workable; the guest house is being run down, as far as trading goes, as the current owners are desperate to retire. And there lies the problem; in order for them to gently retire they've been letting just enough beds for the workload that they can manage. So, of the 4,000 annual bed letting opportunities possible, they've been letting only a couple of rooms each week, yet still making a profit – although profits from the last three years haven’t been mouth watering.

The purchase price is £382,500 and my clients only require £150,000 – so the LTV appealed to all the lenders I discussed it with.

The clients had already tried, unsuccessfully, with Barclay's, (after all she worked there), and so I ran the case by the other major lenders. Only RBS, however, had any appetite for the business but still they strung us along for weeks, only to let us down at the last hurdle; their credit committee just didn't feel that the potential income was a risk worth taking. They were uncomfortable with my clients’ “lack of experience” and so eventually they waved the case goodbye.

I also ran the case by another half a dozen lenders, but all to no avail for varying reasons. So it was last chance saloon, and all roads lead to Lancashire Mortgage Corporation (LMC)... or do they?

Strange similarities abounded here. It seems that 3 or 4 products from the likes of Harpmanor (via Crystal), Bridgewater Acceptances, and LMC – both direct and via Enterprise Finance – are identical on ERPs and on rates that hovered between a low of 9.9% to a high of 12.9%, so I looked into these lenders and it seems that the pot of cash from all of them is all down to the same investor. So basically the same cash, but offered by different lenders in different guises. There is definitely a market place for these products, but for my clients it was the final straw; the monthly cost even on interest only was too large.

The outcome? They’ve had to take their main residence back off the market – letting down a chain of people – plan to let out the unencumbered BTL, and settle back into their current jobs, their dreams dashed – well for the time being anyway.

My question is: why isn't there any middle ground? Why is there such a void of products for these type of people, not fitting the all too stringent High Street model, but not really for the likes of Lancashire and its imitators...