No deposit mortgages now available

Switching from renting to owning your own home has been a challenge for first time buyers for many years. With the cost of living crisis bringing increased household bills, tenants are increasingly unlikely to be able to save enough deposit to satisfy prospective mortgage lenders.

There has always been the argument that paying rent consistently for a number of years carries no weight with lenders. This good credit history is overlooked when considering whether buyers can afford their mortgage repayments, even when their existing rental charge was higher.

Lenders have been nervous about reintroducing 100% mortgages following the 2008 financial crisis. They have previously stuck with 95% mortgage products, which as house prices have risen, have not offered the opportunity for renters to become homeowners.

Skipton Building Society yesterday launched their ‘Track Record Mortgage’ in a bid to redress the balance for first time buyers. This mortgage offers a 100% loan to value mortgage avoiding the requirement of a deposit and the dependency on a family member or friend to act as guarantor.

This new mortgage product, believed to be the first of its kind, is available for tenants who can evidence 12 months of continuous rental payments and monthly household bills alongside the usual affordability criteria required for a mortgage application.

Charlotte Harrison, chief executive of home financing at Skipton, said: "We recognise there’s a clear gap in the market for people who have a strong history of making rental payments over a period of time so can evidence affordability of a mortgage – but there is currently no solution for them to buy a property due to lack of savings or access to family wealth. It is time for a re-think on these massive barriers to home ownership, and we’re proud to take the lead on bringing to the market, solutions for such a massive social problem.”

Skipton’s offer is a fixed 5 year deal with a 5.94% interest rate and is available to first time buyers only who are over 21 years of age. As part of the affordability criteria, Skipton will ensure monthly repayments are the average of tenant's last six months rental costs.

Key eligibility criteria

  • Each applicant must be a First Time Buyer
  • Each applicant must be aged 21 or over
  • The same people who are renting now (and have been for the last 12 months) must be the same people on the mortgage (Exceptions may apply)
  • Must have proof of having paid rent for at least 12 months in a row, within the last 18 months
  • Must also have 12 months experience paying all household bills within the last 18 months
  • Each applicant will have no missed payments on debts / credit commitments in the last 6 months
  • The monthly mortgage payment must be equal to or lower than the average of the last 6 months rental cost
  • The deposit must be less than 5%
  • Maximum loan size £600,000
  • Not available on New Build flats

For those who are struggling to save a deposit this new mortgage product offers tenants a lifetime to get on the property ladder and out of the ‘rental trap’ that many have found themselves in.

Our mortgage team at Poole Townsend have over 50 years experience of working in the industry and can access this deal and many others across a wide range of mortgage lenders both on the high street and online. Make an appointment to discuss your personal circumstances and we can determine whether this is the perfect opportunity for you to get on the property ladder.

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