When your solicitor asks for bank statements dating back months, please believe us when we say they are not just being difficult! Gemma Francis, a Conveyancer in WSP Solicitors’ Residential...
Skipton Building Society’s 100% Mortgages: Assisting Renters onto the Property Ladder
Skipton Building Society has recently introduced 100% mortgages in a bid to assist current renters to get on to the property ladder. Many renters find it impossible to save sufficient funds to be able to accrue a 10% or even 5% deposit in order to secure a mortgage whilst also paying rent. Particularly as house prices have been increasing over the last few years at a steady rate, increasing the amount required for a deposit.
The Skiptons’ deal is only open to first time buyers who can meet the strict eligibility criteria which includes being able to prove that they have been able to meet rental and household expenses without debt for at least 12 months and have a very good credit rating
Benefits of 100% Mortgages for First Time Buyers
The advantage of the 100% mortgage is that the repayments are often less than the monthly rent and therefore any spare funds could be used for other expenses including furnishings or improvements. It also allows renters to get on to the property market sooner so that they can take advantage of the current house prices rather than being in a situation that by the time they have saved for the deposit, house prices have increased and they have to save even more
Considerations and Potential Drawbacks of 100% Mortgage
Where there are advantages, there are also disadvantages. The interest rate is higher than a normal mortgage and is fixed for five years and therefore more expensive than other mortgages.
There will be less equity in the property and if property values fall, this could lead to a negative equity situation and be difficult to overcome. This in turn could mean many more repossessions by lenders if borrowers are not able to keep up the repayments for whatever reason.
Since the launch of the Skipton’s scheme, other lenders are also launching schemes which are designed to assist renters and first time buyers
Social Housing Council tenants can also obtain 100% mortgages but this is a different scenario as their “deposit” is the discount that is offered to them under the Right to Buy scheme.
How WSP Solicitors can help
Anyone interested in taking advantage of these mortgages should contact a financial advisor or mortgage broker to discuss their options. You can also find our costs for mortgages here.
If you have a quick question or would like to request a callback, you can also use our quick online enquiry form. Alternatively, you can call us on 01453 847200.