Nick Jones, national sales manager for the niche lender, said micro-mortgages would appeal to homeowners who were debt-free but want to generate money to reinvest in their property.
He said: “With traditional lenders unlikely to lend sums of money smaller than £25,000, some consumers might find it difficult to secure such amounts.”
These would include clients that have no mortgage outstanding, or owners of inherited properties. As their properties would be classed as unencumbered, they would not be eligible for a secured loan.
Jane King, adviser for London-based Ash-Ridge, said: “Lenders such as the Abbey will do a minimum loan of £6000, Skipton and Principality £5000. I do a lot of shared ownership that often require smaller loans and I have never had a problem finding these smaller amounts for clients.
“The same goes for unencumbered. Unless they can produce market-leading rates and good flexibility then I am not sure they will achieve any additional business.”