100% Mortgages Are Back

Skipton Bank has launched an exciting new mortgage option that aims to assist first-time buyers who have struggled to save up for a deposit. The Skipton 100% mortgage is a five-year fixed mortgage, similar to other fixed mortgage deals available on the market. However, it sets itself apart by not requiring a deposit.

This innovative mortgage product targets individuals who have been renting and find it challenging to accumulate a deposit amidst soaring rents and rising property prices. While it is designed for renters, those who already have a deposit, as long as it is less than 5%, are also eligible to apply.

To be eligible for this mortgage, applicants need to fulfill the following criteria:

• Be a first-time buyer aged 21 or above (applicable to all applicants).
• Have a minimum rental history of 12 consecutive months out of the past 18, with all rental payments made promptly. Evidence of rental history can be provided through bank statements or confirmation from a letting agent.
• Demonstrate timely payment of household bills, such as council tax, electricity, and/or gas, for at least 12 consecutive months out of the past 18. Proof of payment is required.
• Maintain a clean repayment record for the past six months, without any defaults on commitments like Netflix subscriptions or mobile phone repayments. Any missed payments will reflect on the credit report.
• Not be interested in purchasing a new-build flat.

However, there is a caveat to keep in mind. The amount you can borrow under Skipton’s 100% mortgage cannot exceed your monthly rent payment. Typically, mortgage lenders calculate the maximum borrowing amount based on income, expenditures, and their affordability assessments, which usually results in a loan of around four to four and a half times the borrower’s salary.

Contrarily, with Skipton’s 100% mortgage, you can only borrow up to an amount equivalent to your monthly rent. In simpler terms, if your monthly rent is £1,000, the maximum repayment for your Skipton mortgage cannot exceed £1,000. We have provided a table below to offer an estimate of how much you might be able to borrow based on your monthly rent.

(1) Based on a 25-year mortgage term. (2) Note that Skipton’s specific affordability calculations might mean you’re not able to borrow as much as displayed in the table.

It is important to note that even if your rent is £1,000 per month, securing an equivalent mortgage amount is not guaranteed. Skipton Bank conducts its own affordability tests, which might lead to a reduction in the loan amount if they have concerns about your repayment capacity. The maximum borrowing limit for this mortgage is £600,000.

Depending on the location and property value, this mortgage option may not be suitable for everyone. According to the latest UK House Price Index, the average cost of a first-time buyer property is £238,000, which means you would need to pay over £1,300 per month in rent to qualify for a loan of this size. The average asking price of properties sold in Wellingborough last month was £252,116.

Skipton’s 100% mortgage presents an enticing opportunity for first-time buyers who have been diligently paying rent but face challenges in saving for a deposit. It provides an alternative pathway to homeownership, easing the burden of upfront costs while ensuring responsible lending practices to maintain financial stability.