Skipton Has Launched a 100% Mortgage, the first of it’s kind since 2008.
Skipton Building Society has launched a new 100% LTV 'Track Record Mortgage' exclusively for current renters. The five-year fixed rate is available at 5.49% over a max term of 35 years between 95-100% LTV.
The mortgage is available to tenants who feel 'trapped' in the rental cycle and are over the age of 21. The product is subject to affordability and credit score, plus evidence of a minimum of a 12-months good track record rental history.
Skipton is also ensuring the monthly mortgage payment for each applicant is not more than the average of their last six months rental costs that they have paid. For example, a tenant paying an average of £800 per month over the last six months will have a maximum monthly mortgage payment of £800.
Recent research from Skipton found that eight in ten tenants feel ‘trapped’ in the rental cycle, paying rents that are higher than a mortgage which then prevents them saving a deposit to buy their own home. At the same time house prices for first time buyers have risen by an average of 18% in the last two years, an increase of £39,680.
The cost-of-living crisis is cited as the main setback for renters, who are now saving less for a deposit than ever before, with 41% stating house prices in their area are rising too quickly for them to keep up. More than one in three (35%) are struggling to save due to increased rent – and are now having to find an extra £1,000 per year for their landlord.
Charlotte Harrison, CEO of home financing at Skipton, said: “We need to tackle the UK’s housing affordability crisis to enable more people, especially renters who are trapped in renting cycles, to buy their first home.
“People trapped in renting is one of the UK’s biggest housing challenges, having a massive impact on the fabric of our society. With escalating rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit – it’s making it almost impossible for people get onto the property ladder.
“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 and 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.
“This is why we’re introducing our Track Record Mortgage. It has been carefully created with the challenges generation rent is facing in mind, together with the potential risks and challenges they may encounter in the future too. In building our mortgage product with these challenges at the centre we’re ensuring considerations around negative equity have been fully taken into account.”
FAQ
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You’re 21 or older
You’re a first time buyer - someone who has never owned a property before in the UK or abroad
If you do have a deposit, including any gifted deposits, it must be less than 5% of the purchase price
You’re current renters moving household-to-household.
You’ve paid in full at least 12 months rent in a row within the last 18 months, either on your own or with the same household members
You’ve at least 12 months experience paying all household expenditure (e.g. utility, council tax, etc)
You’re looking to borrow up to £600,000
You haven’t missed any payments on credit commitments (e.g. mobile phone bill) in the last 6 months.
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Your rent, averaged over the last 6 months, is lower than the new monthly mortgage payment indicated by the Track Record Calculator, even by a minimal amount
You are buying a new build flat. This is any flat being sold for occupation for the first time which has been newly built or converted within the last 3 calendar years.
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Household-to-household means that the same people who are renting now (and have been for the last 12 months) are the same people applying for the mortgage
If applying alone, the rental and household expenditure payments must have been covered entirely by you for 12 consecutive months within the last 18 months.
Joint applicants (maximum of 4 per application) will need to evidence that these payments have been made either
• collectively, or
• wholly by one applicant.
Joint applicants who have been renting separate properties will be eligible, as long as each applicant can evidence that they have individually covered their entire rental and household expenditure payments. In this instance, when calculating the max loan amount based on the average rental payment over the last 6 months, their combined rental payments can be used.
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A first-time buyer is someone who has never owned an interest in a residential property in the United Kingdom or anywhere in the world and who intends to occupy the property as their main residence.
You are not a first-time buyer if you have ever owned a property in the UK or abroad. This includes Buy to Let properties and any property you have inherited, even if you have never lived there.
Am I eligible if I rented for more than 12 month, but moved in with Family less than 6 months ago to save for a deposit?
You may be accepted in this case as long as you can provide evidence of at least 12 months rental payments, in a row. If all applicants moved out more than 6 months ago, unfortunately you will not be eligible.
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Yes, new build houses are acceptable, however new build flats are not accepted.
A new build home is one that's being sold for occupation for the first time, which has been newly built or converted within the last 3 calendar years.
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The maximum amount we will lend with a Track Record Mortgage is £600,000.
