It’s not news that buying a house has become increasingly difficult. Between a shortage of homes, expensive houses and the inability to build a deposit, being a first-time buyer has never been harder. However, Skipton Building Society has now introduced 100 per cent mortgage loans, making them deposit free.
For many, the hardest part of trying to buy a house is saving for a deposit. Years of renting can prove you can afford the payments, but building thousands upon thousands in a cost-of-living crisis is near impossible. But what if that part was erased? That’s exactly what Skipton Building Society has done, making first-time buying more accessible.
Skipton Launches Deposit Free Mortgages
It’s not the first building society to launch a scheme like this, but it’s a lot more accessible than others.
All you need to do to get a 100 per cent mortgage loan from Skipton is to have 12 months of on-time rental payments and have a good credit history. Whilst that’s not unusual, for this loan you do not need a guarantor, like all other deposit-free mortgages on the market.
As expected, the interest rate for a loan like this is higher than average. On average, the five-year fixed interest rate is currently 5 per cent; for Skipton’s deposit free loan, it rises to 5.49 per cent.
Whilst this does help the situation, house prices are still sky-high due to the lack of them on the market at the moment.
However, there are risks involved. With high loan amounts, mortgages become riskier and also take longer to pay off. As long as people check all parts of their agreement, including small print concerning interest, then it could be a very viable option for some.
How 100 Per Cent Mortgage Loans Could Help Students
Not many students are in a position to buy a house straight out of finishing university. Even with a loan like this, you could still be waiting for a while before getting on the property ladder.
Before 2020, saving for a deposit was easier with the Help To Buy scheme, where the government would pay up to 20 per cent of a new build home. Unfortunately, this closed in October 2020, meaning it wasn’t open for current students and nothing has replaced it yet.
However, a deposit free loan could be helpful for students looking to come first-time buyers.
Firstly, this is extremely helpful to any students estranged from their families. With no need for a guarantor, you don’t have to rely on anyone apart from yourself. There are no awkward and unnecessary conversations, or setbacks simply because of your family situation.
Similarly, students aren’t known for having money, especially with the effects of the cost of living crisis. Time at university isn’t the best time to save up a deposit, so not needing one makes the process easier.
You will still need to have paid rent on time for 12 months, and student accommodation won’t count. So, you’ll have to wait at least a year before applying for a Skipton mortgage loan. However, that’s a lot less time than if you needed a hefty deposit. With student loans and, let’s face it, not the highest-paying jobs straight out of university, the likelihood of building a lot of money in reserve is more unlikely.
You should never jump into a decision like this. You need to be certain it’s what you want, and ensure you read over contracts half a dozen times (get someone else to do it too!) before signing anything. This doesn’t mean you’ll be able to be a first-time buyer immediately, especially with a shortage of houses, but it’s a step in the right direction for many renters wanting to buy a home.
