Skipton Building Society has launched a new 100% mortgage product for renters who can prove they’ve covered their rent and bills for at least a year.
Good news for renters who want to buy their first home. Skipton Building Society has just announced a new 100% mortgage product called Track Record to help first-time buyers currently renting get onto the property ladder.
Track Record is available for renters who can demonstrate a proven track record of affordability of all monthly rent and household bills for a minimum of 12 months in the last 18 months.
First-time buyers
If you’re buying with someone else, both applicants must be first-time buyers, and you must both be 21 or over. Applicants can borrow up to £600,000 and must not have missed any payments on all loans or credit commitments in the last six months.
Track Record is not available on the purchase of new build flats (but is available on new build houses), and the monthly mortgage payments you’d be covering must be equal to or lower than the average cost of the last six months’ rent. In addition, there is a maximum borrowing term of 35 years.
If you’re a sole applicant, you must still prove that your rental and household bills have been covered by you entirely for 12 consecutive months within the last 18 months.
Affordability calculator
To apply, borrowers must complete Skipton’s Track Record Calculator to determine how much they could borrow. The next step will be to complete the full Affordability Calculator, giving the lender a more detailed view of the borrower’s current financial situation. It will take into account current income and outgoings.
‘Affordability is based on either the borrower’s average rental payments over the last six months or the standard affordability calculator based on their income,’ says Amirah Nawaz, MB Associates’ Mortgage & Protection Adviser. ‘The lender will offer whichever figure is lower. Affordability is capped at 4.49 x income.’
Despite the scheme being a 100% loan-to-value mortgage (i.e. 100% of the property price), Skipton will consider borrowers putting in a deposit, even if it’s been gifted. However, if borrowers have a deposit of 5% or more, it would be better to consider getting a 95% mortgage.
Mortgage advice
A good mortgage broker can do the legwork for you and advise you on your best options.
‘I do think Skipton will have started an excellent trend that other lenders will follow, but perhaps with slightly different criteria,’ says Amirah. ‘For example, not having rented for less than 12 months, not limiting how much someone can borrow based on the rent they are currently paying or a 4.49 x income.’
We can help with mortgage advice, so please contact us for more information on buying your first property.