Skipton has launched a new mortgage specifically for renters who can now buy a house without needing a deposit.
Tenants who can evidence affordability and have a strong track record of rental payments can borrow up to 100% of a property value with its five-year fixed rate Track Record Mortgage. The lender promises that it will ensure these first-time buyers won't pay more on a monthly basis than the average of their last six months' rental payments.
Skipton says its research reveals how 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. More than one in three (35%) are struggling to save as their rent has increased, with these now having to find an extra �1,000 per year for their landlord.
While a handful of other no-deposit deals are available on the market, they all need the financial backing of family or friends.
Charlotte Harrison, CEO of home financing at Skipton, says it recognises there's a clear gap in the market for people who have a strong history of making rental payments, so can evidence affordability of a mortgage.
She adds: 'This 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.'�
Lee Grandin, MD of Landlord Mortgages, adds that if mortgage lenders remain confident to lend, then more lenders could follow with similar style products. 'From a landlord's perspective, the fact any lender is prepared to advance a 100% mortgage in the current climate is positive,'� he tells LandlordZONE.