Saving for a deposit to buy your first property can be challenging when you’ve got rent and bills to pay, which is why Skipton Building Society has launched a 100% mortgage.
The Skipton Track Record is a 100% five-year fixed mortgage available to first-time buyers. It’s designed for renters who are struggling to save for a deposit but want to get on the property ladder.
Who can apply for this 100% mortgage?
As with all mortgage products, if you’re interested in applying for a Track Record mortgage, you must meet specific eligibility criteria. The requirements for this mortgage are as follows:
- Each applicant is a first-time buyer
- Each applicant is aged 21 or over
- You have less than a 5% deposit
- Each applicant has no missed payments on debts or credit commitments (e.g. mobile phone bill) over the last six months
- You want to borrow up to £600,000
- The same people who are renting now (and have been for the last 12 months) 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 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.
What are the drawbacks?
Usually, when you apply for a mortgage, a lender will determine how much you can borrow based on your income and outgoings and their specific affordability calculations. Typically, it’s roughly your salary multiplied by four to four and a half.
However, with Skipton’s 100% mortgage, your monthly mortgage repayments can’t be higher than what you pay monthly in rent. So, for example, if you’re paying £1,000 a month in rent, the maximum you may be able to borrow is £163,000* on a 25-year term. With the average first-time buyer property costing £255,000 (according to the latest UK House Price Index), you’d need to be paying roughly £1,600 a month in rent to qualify for this level of mortgage.
Also, 100% mortgages come with a risk of negative equity if house prices fall. In this situation, you could find yourself owing more on your mortgage than the value of your property. There’s less risk of this happening if you’ve paid a deposit which, depending on the amount you put down, provides a buffer.
Whether a 100% mortgage is right for you depends on your unique circumstances. It’s always helpful to seek advice from a mortgage expert who can explore your options.
To find out more about the Skipton 100% mortgage or for help getting a mortgage, please get in touch.
* Calculation is based on the current initial interest rate of the Skipton Track Record mortgage and only provides an indication of what it may be able to lend. For the exact amount, an applicant would need to complete Skipton’s full Affordability Calculator.