100% mortgages for first-time buyers

It has recently been announced that Skipton Building Society has launched a 100% mortgage, with an aim to tackle the UK's housing affordability crisis and to enable more people to get on the property ladder.

The product will be welcomed by those individuals who are trapped in rental cycles, especially those who have little savings or where there is no financial support from family members. This new 100% mortgage product is a contrast to existing no-deposit mortgage deals offered by other lenders, as it does not require a family member to back the transaction financially as a guarantor.

To be eligible for this product, you must:

• be a first-time buyer

• be aged 21 or over

• have no missed payments on debts or credit commitments in the last 6 months

• be looking to borrow no more than £600,000

You must also meet the “household-to-household” criteria. This means that the same person or people currently renting must be the same person or people applying for the mortgage.

Most importantly, you must be an existing renter. You must have proof of having paid rent and household bills for at least 12 months in a row (within the last 18 months).

Laura Hyam, solicitor in our conveyancing team, believes that this is a positive step forward for first-time buyers:

“This is the first time that a 100% mortgage product of this kind has been offered since the 2008 financial crisis and it could be a great method for helping first-time buyers access the property ladder. It is early days, with Skipton Building Society being the first to offer a product of this type, so it will be interesting to see if other mortgage lenders follow suit.

“I’d recommend for anyone looking to use a 100% mortgage to seek thorough advice on whether this mortgage model is an appropriate buying method for them. First-time buyers should seek financial advice from their mortgage brokers. Once a mortgage is in place, here at Wilkin Chapman, we are more than happy to help first time buyers get on the property ladder and secure their dream homes using a 100% mortgage.”