While there are a few other no-deposit deals available, they all require the financial backing of friends or family.
UK-based Skipton Building Society has launched a deposit-free mortgage aimed specifically at renters
Skipton’s deal requires 12 months of on-time rental payments and a good credit history but does not need a guarantor. However, at 5.49%, the interest rate is more expensive than the average five-year fixed of 5%. The building society says it recognized a “gap in the market” as first-time buyers are struggling to get on the property ladder due to the shortage of affordable properties within their budget.
Skipton, the UK’s fourth-biggest building society, has acknowledged the difficulty of saving for a deposit while paying increasingly high rent prices.
David, who is renting with his partner and new baby in North Yorkshire, explains that “getting that deposit together” is the biggest challenge. Skipton’s Chief Executive Stuart Haire told the BBC that “until now, there has been no solution for them [renters] to buy a property due to a lack of savings or access to family wealth”.
Financial data firm Moneyfacts reports that there are currently 15 other zero-deposit products on the market, accounting for just under 0.3% of the UK market
However, not everyone welcomes the rise in zero-deposit mortgages as riskier mortgages with a high loan-to-value were a root cause of the 2008 financial crash. Mortgage expert Andrew Montlake believes that as long as 100% loan value mortgages are “underwritten sensibly,” the world is now different from 15 years ago when lenders were more interested in volume than quality.
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