Bank creates ‘no-deposit’ mortgage based on ability to pay rent after house prices soar by £39,000 in two years
A BANK has created a “no-deposit” mortgage which offers loans based on Brits’ previous ability to pay rent and bills.
It comes after house prices soared by £39,000 in two years, according to Skipton Building Society.
A study of 2,000 adults, who currently live in a rental property, shows that 86 per cent are keen to step onto the property ladder.
However, due to the cost of living crisis, 41 per cent of adults say that house prices in their area are rising too quickly for them to keep up.
The study was commissioned by Skipton Building Society to mark the launch of a new mortgage, the ‘Track Record’, which helps tenants to purchase their first property without needing a deposit.
The deal, available for first-time buyers aged 21 across the UK, means renters can take out mortgages worth up to 100% of the value of the property – scrapping deposits completely.
CEO of home financing in Skipton, Charlotte Harrison, said: “In over 20 years the number of people privately renting has more than doubled, and many of these tenants’ hopes of one day owning their own home continues to fall.
“We need to tackle the UK’s housing affordability crisis to enable more people, especially renters who are trapped in renting cycles, to have access to buying a home.”
Ms Harrison added: “That’s why we’ve developed the Track Record mortgage, which will enable people in rental cycles to access the property ladder for the first time.”
Experts said the new deal could help some future homeowners to “get off the rental treadmill”, although some said that affordable housing remains in short supply.
Andrew Montlake, managing director of mortgage broker Coreco, stated: “There are many potential buyers who have proved they can afford to pay rent at the current high levels, but just do not have the means to meet ever-increasing deposit levels and feel constantly at the mercy of rising rents.”
Mr Montlake added: “This new product will not be suitable for everyone, but it will help some of the new generation of home buyers get off the rental treadmill and enjoy the security of owning their own home.”
The average asking rent for a first-time buyer-type property is £1,120 per month, having soared up to 11% compared with last year, according to Rightmove.