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UK building society launched first ever deposit-free mortgage scheme

With an aim to helping renters climb the property ladder, Skipton Building Society has introduced a new mortgage scheme that requires no deposit and can be up to 100% of the value of the house.  

As the cost-of-living continues to bite, a recent study of 2,000 renters found 85% are ready to embark on the journey of buying a house but are unable to do so because of the market’s current hike in prices.

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More than one of three of those surveyed said they are struggling to save, owing to the increase in rent payments, while 42% believe their mortgage repayments would be more affordable than their current rent.

To help with this, the Skipton Building Society have said their new programme will enable renters to get on the property ladder without relying on parents or other guarantors for the deposit, which often equates to around 10% of the property asking price.

In order to qualify for a Skipton Track Record Mortgage people have to prove a minimum of 12-months good track record rental history and be first-time buyers over the age of 21.

Following this, eligible customers will undergo usual affordability and credit score tests, but should they be successful, they would then be offered a 100% loan-to-value mortgage with a five-year fixed rate at 5.49% over a maximum term of 35 years.

Skipton will also ensure that those taking out such a mortgage will not pay more in monthly repayments than they did in rent for the last six months of their tenancy.

Charlotte Harrison, Chief Executive of Home Financing at Skipton Building Society, said: ‘People trapped in renting is one of the UK’s biggest housing challenges, having a massive impact on the fabric of our society.

‘With escalating rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit, it’s making it almost impossible for people get on to the property ladder.

‘We recognise there’s a clear gap in the market for people who have a strong history of making rental payments over a period of time so can evidence affordability of a mortgage — but there is currently no solution for them to buy a property due to lack of savings or access to family wealth.

‘It is time for a rethink on these massive barriers to home ownership, and we’re proud to take the lead on bringing to the market solutions for such a massive social problem.’

Similar schemes to this one have recently come into force to help people struggling with the current climate. The government’s Help to Buy scheme oversaw the Treasury lending homebuyers between 5% and 20% of the cost of a new-build and up to 40% in London.

Although the Help to Buy scheme came to end in October last year, there have been rumours that something similar could be introduced, however, projects that help people with the cost of their home cast concern as risker mortgages with a high loan value were the cause of the 2008 financial crash.

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