Talk of 100% mortgages may feel like something of a back to the future moment but it’s a very different climate to the days when they were widely available in the market.
Skipton’s Track Record mortgage is attempting to serve a part of the market that has recently been wholly reliant on help from the Bank of Mum and Dad.
Renters will have been frustrated by the need to build a big deposit to meet high purchase prices, whilst covering steep rental payments at the same time.
This deal recognises the fact that hard-pressed first-time buyers that have met their rent and household bills over a sustained period of time should demonstrate their ability to meet a mortgage payment lower than their rent, irrespective of the existence of a deposit.
It won’t solve all the difficulties for all first-time buyers and there will be affordability limitations on the borrowing amount which may still not meet the required purchase price.
However, it offers a measured approach that gives credit for the fact that many tenants will have built up a strong track record of managing their housing costs responsibly.
There will always be concerns that no deposit could risk negative equity but this is a longer term product for that reason and if it can help some accelerate the move from renting to home ownership it could be a significant new product.
David Hollingworth of L&C Mortgages
