The British constructing society has launched a no-deposit mortgage option. This is particularly geared toward current landlords and people struggling to climb the property ladder.
The Skipton Building Society said that while the brand new contract requires 12 months of on-time rent payments, it doesn’t require a guarantor. A superb credit history can also be a requirement, nevertheless other no deposit mortgage offers also require financial support from family or friends. It isn’t.
But what is the catch?
Well, the mortgage payment rate is 5.49% – higher than the typical of 5% for a five-year fixed-rate mortgage.
There are currently 15 no deposit products available. This is lower than 0.3% of the UK market.
An enormous hurdle for a lot of attempting to rise up the actual estate ladder is trying to avoid wasting enough for a deposit. Another problem faced by first-time buyers is finding a property that’s inside your budget and inexpensive.
Rent increases over the past yr have made it all the time difficult for tenants to lower your expenses for his or her security deposit, and for a lot of it seems completely unattainable to purchase a house in any respect. While Lifetime ISAs (LISAs) can be found to those looking to avoid wasting for a house, the unique Help to Buy program launched by the federal government is not any longer an option.
The ‘Help to Buy’ scheme involved the Treasury lending homebuyers between 5% and 20% of the fee of a newly built home – rising to 40% in London. It closed in October 2022.
According to the Skipton Building Society, eight out of ten tenants feel “trapped” within the rental cycle. 35% of tenants also said they were struggling to avoid wasting their deposit on account of rising rents, with many having to seek out as much as £1,000 a yr for his or her landlords.
Charlotte Harrison, CEO of Home Financing in Skipton, said:
However, zero deposit mortgages should not welcomed by everyone. They are seen as riskier mortgage options with a high loan-to-value ratio. These sorts of loans were the foundation reason behind the 2008 financial crash.
Economists warn that lending to people aged 21 and over with little or no credit history can result in negative equity for borrowers. This is particularly true in times when house prices are under pressure.
