The building society’s new mortgage aims to get tenants back on the property ladder
Former homeowners turned renters may now be back on the property ladder, according to a building society.
Skipton Building Society is expanding the pool of aspiring homeowners who can apply for its success mortgage to support more “privileged renters”.
The move could potentially help people who have moved from home ownership back into the rental sector, for example due to a divorce or move.
The zero-deposit mortgage deal was launched back in May and was aimed at first-time buyers. Skipton said more than £40 million of mortgage applications had been received since then.
More than half of applicants have purchased terraced homes so far and almost a fifth (17%) of applicants are based in Scotland, the company said.
We actively reviewed the product and listened to feedback from our customers. Our focus has been on how we can evolve it to help more people break free from the stuck rental cycle
Skipton announced on Monday that people who were previously homeowners but have not owned a home in the last three years, as well as first-time buyers, can now apply for the deal.
The company’s success mortgage is a five-year, fee-free fixed-interest product with an interest rate of 6.19% and a maximum term of 35 years.
Figures from Moneyfactscompare.co.uk on Friday last week showed that the average five-year fixed-rate mortgage for residential and owner-occupied properties on the market was 6.19%, although this was true across all deposit sizes, whereas people are accessing it with the Skipton deal can property managers without deposit.
When the deal launched in May, the company made it generally available to first-time buyers across the UK. Renters aged 21 and over may be able to take out a mortgage of 95 to 100% of the value of the property they wish to purchase.
In return, they must have a strong track record of paying their rent and demonstrate a rental history of at least 12 months.
This proof can be provided, for example, through account statements or a letter from a registered broker.
Skipton said that as a responsible lender, it ensures that each applicant’s monthly mortgage payment is not higher than the average of the rental costs they paid over the last six months.
For example, a tenant who paid an average of £800 a month over the last six months would have a maximum monthly mortgage payment of £800.
In the Track Record Mortgage Terms and Conditions on its website, Skipton stated that the company does not lend for newly built homes, but does accept applications for newly built homes.
Charlotte Harrison, CEO of Home Finance at Skipton, said: “Following the successful launch of our Track Record Mortgage for first-time buyers, we have been actively reviewing the product and listening to customer feedback and focusing on how we can develop it further to benefit you to help.” More and more people are freeing themselves from the deadlocked rental cycle.
“I am proud to announce that starting today, we are expanding product eligibility to renters who previously owned a home.
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“Unfortunately, there are a number of reasons why people fall off the property ladder, from divorce to moving to a new area to serious illness. However, for many, getting back onto the property ladder can be difficult, leaving many trapped in staying in renting, even after previously owning a home.
“The significant rise in property prices in recent years and the associated costs associated with purchasing a home means that even after retaining equity from a previous property sale, securing a deposit while renting is still a barrier to represents those trying to get back on the ladder.
“We launched our Track Record Mortgage because we identified a clear gap in the market for people who have been making rental payments over a long period of time and can clearly demonstrate the affordability of a mortgage – but there was no solution for them to buy a property , because there is a lack of savings or access to family assets.
“People caught in the rent trap is one of the UK’s biggest housing challenges, having a massive impact on the fabric of our society. As rising rents and the rising cost of living further impact people’s ability to save for a house deposit, it is becoming almost impossible for them to climb the property ladder. By expanding our lending criteria, we can help more people get the keys to their home.”
https://www.standard.co.uk/business/money/building-society-s-new-mortgage-aims-to-get-renters-back-on-property-ladder-b1104548.html The building society’s new mortgage aims to get tenants back on the property ladder
