No Deposit Mortgages | Leicester
As a first-time buyer, getting a foot on the property ladder can seem like an insurmountable challenge, especially with the rising costs of living, soaring property prices, and the need to save up for a substantial deposit. However, there is good news for aspiring homeowners facing this hurdle – the advent of no deposit mortgages.
Last Updated: 3rd August 2023
What are No Deposit Mortgages?
A no deposit mortgage is a type of home loan that allows first-time buyers to purchase a property without needing to put down a deposit upfront. Traditionally, most mortgage lenders require buyers to provide a deposit, typically around 5% to 20% of the property's value, to secure a mortgage. However, no deposit mortgages break this norm, presenting an attractive option for those struggling to accumulate enough savings for a down payment.
The Skipton Building Society Track Record Mortgage
One noteworthy no deposit mortgage option is the Skipton Building Society Track Record Mortgage. Launched in an era of spiralling rents and increasing property prices, this innovative mortgage solution is designed to assist first-time buyers, especially renters, who have been paying rent for at least 12 months but find it challenging to save for a deposit.
The key features of this mortgage include:
Eligibility: To qualify, applicants must be first-time buyers aged 21 or older, with a proven track record of having paid rent and household bills on time for at least 12 consecutive months within the last 18 months. Missed repayments on other commitments within the last six months may affect eligibility.
Deposit-Free: Unlike traditional fixed-rate mortgages, the Skipton Track Record Mortgage does not require a deposit, allowing buyers to enter the property market with greater ease.
Loan Limitation: Borrowers can secure a mortgage amount equivalent to or less than their current monthly rent payment. However, Skipton will still conduct affordability tests, and the maximum borrowing limit with this mortgage is £600,000.
Pros and Cons of No Deposit Mortgages
Cons:
Higher Interest Rates: No deposit mortgages often come with higher interest rates compared to conventional mortgages with a deposit, resulting in higher monthly repayments and overall costs.
Limited Borrowing Amount: The mortgage amount is limited to the equivalent of the monthly rent payment, which may restrict the properties buyers can consider.
Risk of Negative Equity: No deposit mortgages carry a higher risk of negative equity, where the mortgage amount becomes more than the value of the property, especially if property prices drop significantly.
Pros:
Accessibility: No deposit mortgages open up homeownership opportunities that might have otherwise been out of reach, particularly for first-time buyers with limited savings.
Relief from Deposit Burden: By eliminating the need for a deposit, buyers can use their savings for other expenses or investments, making the home buying process more manageable.
Viability for Renters: No deposit mortgages are particularly beneficial for renters with a stable rental history, providing them with a more accessible path to homeownership.
No Deposit Mortgages for Renters
No deposit mortgages, such as the Skipton Building Society Track Record Mortgage, offer a lifeline for first-time buyers facing the daunting challenge of saving for a deposit. These innovative solutions pave the way for renters with a strong rental history to achieve their dream of homeownership, providing them with an accessible path into the property market.
Ready to assess your No Deposit Mortgage options?
At Mortgages By Anna, we offer tailored guidance and comprehensive support to make your dream of homeownership a reality. Anna will walk you through the advantages and considerations of no deposit mortgages, assist you with the application process, and help you secure the most favourable mortgage terms.
Don't let the barrier of a deposit hold you back. Take the first step towards homeownership today by contacting us on 0116 3262610 or send an enquiry using the form below.
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