Deposit-free mortgage for renters and first-time buyers launched with 100% loan
A deposit-free mortgage for renters and first-time buyers has been launched by a UK building society.
Skipton Building Society launched the UK's first 100% LTV (Loan to Value) mortgage for renters and first-time buyers.
It's said to recognise a "gap in the market", helping millions of Brits to get on the property ladder.
READ MORE: "Trapped" tenants feel stuck in rental cycle – as housing prices rise
It will help "take away the dependency on the bank of mum and dad or guarantors".
The "Track Record Mortgage" means tenants must prove affordability for a borrow up to 100% of a property value.
Available to people aged 21 and above, the five-year fixed rate mortgage is also exclusive to first-time buyers.
It's subject to a credit score and proof of 12 months' "good track record rental history".
According to Skipton, there are 4.6million households renting privately across England.
Research found eight in 10 tenants felt "trapped" in the rental cycle, paying costs higher than a mortgage.
Meanwhile, house prices for first-time buyers have also risen by an average of 18% in the last two years.
It also claimed more than one in three (35%) are struggling to save due to increased rent.
Charlotte Harrison, CEO of Home Financing at Skipton, said: "We need to tackle the UK's housing affordability crisis to enable more people, especially renters who are trapped in renting cycles, to buy their first home.
"We recognise there's a clear gap in the market for people who have a strong history of making rental payments over a period of time and can evidence affordability of a mortgage.
"But there is currently no solution for them to buy a property due to lack of savings or access to family wealth.
"It is time for a re-think on these massive barriers to home ownership, and we're proud to take the lead on bringing to the market, solutions for such a massive social problem."
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She added: "This is why we're introducing our Track Record Mortgage.
"It has been carefully created with the challenges generation rent is facing in mind, together with the potential risks and challenges they may encounter in the future too.
"In building our mortgage product with these challenges at the centre we're ensuring considerations around negative equity have been fully taken into account."
But one campaign warned that while the deal could help buyers, the lack of affordable houses remains a huge obstacle.
Generation Rent, which campaigns for the rights of private renters, said the shortage of budget-friendly properties for first-time buyers is still a huge issue.
Will Barber Taylor from the group told the BBC: "It's not necessarily going to help all the people who are looking to buy a first-time home if there aren't more houses available to buy.
"It would need to be in combination with other factors to make it effective."
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