How does the 100 percent mortgage work?
We have seen the introduction of a new 100 percent mortgage product from Skipton Building Society that means as a buyer you will not need to provide any upfront deposit towards the purchase of a property.
This could be great news for renters that are struggling to save for a deposit, as there has not been the option of a 100 percent mortgage in the UK since 2008.
The 100 percent mortgage product is called ‘Track Record Mortgage’ and is aimed at first-time buyers. As the name suggests it will be based largely on your track record of rental payments.
Usually, the minimum deposit required to buy a property is 5%. Using this 100 percent mortgage product can help you get out of the rental cycle and onto the property ladder without having to find a large deposit payment upfront.
Based on a purchase price of £180,000 this would be a saving of £9,000 deposit. (If we were working with the minimum deposit of 5%).
Am I eligible for this mortgage product?
The amount you can borrow will be based on the lenders affordability which will include a full assessment of your current income and outgoings. They will also use the amount you currently pay in rent each month to help assess the affordability. The new mortgage payment will have to be equal to or lower than your current rental payment.
Not everyone will be eligible for this mortgage product, and it will be based on individual circumstances. We will be able to talk you through the criteria and help establish if it is something that might be a good fit for you.
Some of the key eligibility criteria includes:
- Each applicant must be a first-time buyer
- Each Applicant must be aged over 21
- Must have proof of 12 months consecutive rental payments made in the last 18 months
This is just a few criteria points that must be met, as we can talk you through the full list if it is something you wish to explore further.
What else should I consider?
While a 100 percent mortgage may seem like the perfect solution, it’s important to weigh up all aspects. These types of mortgages can sometimes come with higher interest rates compared to those where a deposit is provided. Additionally, borrowing the full property value could increase the risk of negative equity if house prices fall. That said, for many first-time buyers, especially those renting long-term, this could be the only viable path onto the property ladder.
It’s also worth considering the overall cost of borrowing over the term of the mortgage. With no deposit paid upfront, your monthly repayments may be slightly higher, and you may find that your choice of lenders or deals is more limited. As always, financial advice tailored to your individual situation is essential.
We always recommend taking the time to understand your budget fully. Being clear on your regular expenses, emergency savings, and future financial goals will help ensure that taking on a 100 percent mortgage remains manageable and sustainable in the years ahead. As with any mortgage decision, seeking professional advice is key to making sure it’s the right option for your financial circumstances.
If you are interested in this 100 percent mortgage product and think it might be something that can help you get on the property ladder, then get in touch today to see if we can help.
Tom
Mortgage Broker
01752 905011
Info@completemortgageadvice.co.uk
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
