Buying your own property is a very exciting milestone in anyone’s life. It means you can really stamp your own style onto your place and call it home for as long as you want. You aren’t constantly wondering when your landlord will put the rent up or if they might suddenly decide to sell, leaving you homeless.
However, saving for a deposit so you can get a mortgage can be challenging when you are a long-term renter. It can take years to save up enough money to buy your own home. That’s why Skipton Building Society have created a brand-new 100% mortgage product called Track Record which will enable renters to use their perfect rent payment track record as proof of their suitability for a mortgage. Here’s how it works.
Eligibility criteria for your 100% mortgage
To be eligible for this 100% mortgage, there are several criteria borrowers must meet, namely:
• First-time buyer
• Aged over 21
• Must provide proof of consistent rental payments for at least 12 consecutive months in the last 18 months.
• Must provide proof of no missed payments for other household & personal bills such as utilities and mobile phone.
• Borrow up to £600,000
• Not available on new-build flats (new build houses are acceptable)
• Joint applicants for the mortgage must have been renting together or be able to prove that each applicant entirely covered the rental cost and household expenses.
• Maximum term of 35 years
• Maximum LTI (Loan-to-income) is 4.49 times.
• Monthly mortgage payment must be equal or lower than the average rental payment for the last 6 months
Why Does a Strong Financial Track Record Matter?
Your suitability for a 100% mortgage is assessed by considering how consistently you have met other commitments in the recent past. The building society will be looking for evidence of a strong financial track record with no missed or late payments, not only for your rent, but for other household bills.
To ensure your track record is flawless, it’s a good idea to regularly check your credit report, set up direct debits to pay your credit cards and other bills and review your bank statements. Set aside a couple of hours a month to get into the habit of checking on your financial health.
Affordability and Deposit Considerations
Unlike other mortgage products, the amount you can borrow is not just based on your income, it is assessed based on your track record of paying your rent. The Track Record product works by offering applicants a mortgage where the monthly mortgage payment is equal or lower than the average rental payment made over the past six months.
For example, if you have been renting and the rent paid was £1,250 per month, you would be eligible to borrow around £200,000 on a 100% mortgage. For this product you may also put down a small deposit of less than 5% which would reduce your monthly payments.
How 100% mortgages can help you own your first home
Saving for a deposit can be the biggest barrier for first-time buyers. This product gives hope to long-term renters who might otherwise never manage to save 5% of the purchase price of a property, although they are perfectly able to consistently meet rental and other bills. At the time of writing, the Track Record product is offered at 5.49% fixed for 5 years and has no arrangement fees.
Owning your own home is a dream for many people, but now it looks like it could become a reality for more people with this new deal. If you are stuck in a rental trap because you can’t save a deposit, contact us at Simmonds Mortgage Services. Email firstname.lastname@example.org or call us on 01184 693037 for a free, no-obligation chat about your circumstances.