As Guildford mortgage brokers, we’ve seen no shortage of negative news, government gossip and downright drama over the last 6 months, much of which, in some way, tied back to the mortgage industry.
On that basis, there couldn’t be much more that could pique our interest, right? Wrong – especially when the words 100% mortgages are uttered. After all, we haven’t seen a 100% mortgage since the heady days of homeownership ended in 2008 with the arrival of the credit crunch.
So, what exactly is going on?
Reprieve for renters
Skipton Building Society has launched what it calls the Track Record Mortgage – a 100% mortgage designed to help renters become homeowners.
Those who are unable to exit the rental spiral, whereby the cost-of-living crisis combined with increasing rental costs make the aspiration of buying a property nothing more than a perpetually dangling carrot, can now ditch the deposit (well, most of it) – and their landlord, too.
But how does it work?
Applying for a 100% mortgage
It’s undoubtedly good news for renters – but there are some rules and limitations around eligibility. Let’s take a look at what they are.
First of all, if you want to apply for a 100% mortgage, you must be 21 or older. You’ll also need to qualify as a first-time buyer, which, in this case, is someone who has never before owned a property in the UK or abroad.
If you do have a deposit, then it has to be less than 5% of the property’s value – a point, which, if, as a renter you’ve been doing all it takes to build your deposit savings pot, will probably take a little time to get your head around. After all, from being told you’ll need a minimum of 10% deposit a few months ago to being told you can’t put in any more than 5% is quite a shift.
You’ll also need to evidence the fact that you’ve paid for 12 months’ rent in a row over the last 18 months, as well as 12 months’ evidence that you’ve paid all the bills typically associated with running a home, such as council tax and utilities.
There is a limit to how much you can borrow, but at £600,000, it’s likely to be ample for most people; even those looking to get a mortgage in Guildford, where property prices are notoriously high. An applicant’s credit scoring has to be pretty good, too – so no missed payments on commitments over the last 6 months.
There are other factors to consider, but nothing our team of Guildford mortgage advisers can’t cover off with you should you decide that this is the route for you. However, perhaps the main two points to be aware of are:
1. You will not be eligible if your new mortgage monthly payment is more than your average monthly rental payment over the last six months.
2. You cannot purchase a new build flat – or any flat that’s being sold for the first time, such as a renovation
Is this the start of a 100% mortgage comeback?
Potentially, yes. Whilst Skipton Building Society is the first, it’s unlikely to be the last. Most people want to own their own home. And being exposed to hikes in rent is even less palatable when the cost of living is also on the up.
Whilst it’s unlikely that we’ll see the same volume of 100% mortgages that we saw prior to the 2008 crash, it’s certainly a step forward for renters who are tired of paying a high cost and want their own place.
Looking for a Guildford mortgage broker? Contact Complete Mortgages on 01483 238280 or by e-mailing info@complete-mortgages.co.uk. Our team of Surrey mortgage advisers will be happy to help.
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