Earlier this month, Skipton Building Society announced the introduction of a deposit-free mortgage aimed at renters who may be struggling to get on the property ladder. Although there are other no-deposit deals available to buyers, this is the first mortgage offer that does not require the backing of a guarantor.
We are all too familiar with the struggles first time buyers face, often stuck in the cycle of high rent levels, coupled with the rising cost of living, make it increasingly difficult to save sufficient funds for a home deposit. Some people may be lucky to receive help from the “bank of mum and dad” however, for those without this support, there are very limited options. If you find it particularly challenging to save, then the Skipton mortgage may be the right choice for you.
The “Track Record Mortgage” is straightforward in that – if you can demonstrate you have a good track record of paying rent on time and a good credit history, you may be eligible.
Who is eligible?
The various criteria to meet in order to qualify for the mortgage is listed below. It includes the standard affordability tests, but is essentially designed to make mortgages accessible to those who have been responsible and consistent with their finances:
- You are a first-time buyer and aged 21 or over
- You have less than a 5% deposit in savings
- You have no missed payments on debts / credit commitments (e.g. mobile phone bill) over the last 6 months
- You intend to borrow up to £600,000
- You meet the “household-to-household” criteria (this means that the people renting currently are the same people applying for the mortgage)
- You’re not looking to buy a new build flat
- You have proof of having paid at least 12 months’ rent in a row, during the last 18 months
- You must also have experience of paying all household bills (e.g., utility bills, council tax etc) for at least 12 months in a row, during the last 18 months.
How do I know if this is right for me?
It is important to be aware that this mortgage will not be appropriate for everyone. For example, if you are hoping to purchase a new build home or plan to purchase a property valued at £650,000, you would not be eligible to apply. The mortgage also has a 5-year fixed rate of 5.49% which is higher than the average 5-year fixed rate mortgage which is currently around 5%. A “fixed rate” means that even if other interest rates go up or down during that time, your interest rate would not change.
We recommend getting advice from a specialist mortgage advisor in order to assess your options before making any decisions. This mortgage will mean many buyers who cannot currently afford a deposit have the opportunity to get on the property ladder for the first time.
If you are hoping to purchase a new home, please get in touch with our property experts to discuss your plans.