Posted on: May 30, 2023
The New Skipton Building Society 100% Mortgage for Tenants
11-07-2023 Correct at time of publication, but subject to change
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Skipton Building Society recently announced a 100% mortgage for tenants. This sort of product has been suggested as being in the pipeline for a few years, but now it is here.
It has long been claimed that tenants paying high rents are in a vicious circle. They are able to demonstrate affordability to a lender much more than a first time buyer living with family as they have a history of meeting rent and bills. But it is the rent and bills that stops the tenant saving the required deposit. So this could be the solution for some…
Media reports state it will provide 95% to 100% lending on purchase prices of up to £600,000. The maximum income multiple is 4.49 time income and the applicants must pass the credit score and demonstrate a satisfactory payment history for the 12 months prior to application. The new monthly mortgage payments cannot exceed the average of the last 6 months rent.*
Village Financial Services Independent mortgage adviser Craig Power said:
“According to Money Facts there are 15 true 100% mortgages on the market at present but they all require some family involvement via guarantors or security. This new product allows tenants to borrow without family involvement. However it won’t work for everyone, remember your mortgage payments cannot exceed the average rent and it is likely that agreement will only be made to applicants with higher credit scores”.
“Whilst some might say that we are going back to the dark days of 100% mortgages, I think with a measured approach and with borrowers understanding the risk, there is a place in the market however small for this type of product. Of course there is a risk of negative equity but this has to be balanced against applicant owning their own home and of course the dead money going into landlords pockets. Interest rates are likely to be higher than the average because of the inherent risk to the lender. Remember it costs lenders a lot of money to provide this type of loan because of the cash they have to hold to protect against default. Time will tell whether other lenders will follow suit”.
Craig went on to say “Of course there is at least one other lender that provides a product that allows borrowers to obtain a unsecured personal loan for the 5% deposit and then agrees (subject to credit score and underwriting) the 95% loan. In considering all of the products available and which ones might be appropriate it is important to get independent advice”.
For more information on 95 and 100% mortgages you can contact Craig Power or Luke Spires at Village Financial Services Ltd.
*Source This money.co.uk
