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The Return Of 100% Mortgages

Couple Getting Keys to House

Saving for a deposit is one of the main obstacles quoted by buyers when looking to purchase their home. Deposits are looked upon as a percentage of the property purchase price. As such, even a 5% deposit based on the current market can seem like a mountain to climb.

Can you get a mortgage with no deposit:

There are lenders who offer 0% mortgages. Many of these are available with the assistance of a third party. This is usually by means of someone helping with a guarantee of some sort.

Skipton Building Society has recently launched a program designed to assist first-time buyers who are currently renting. Given the financial strain of paying rent and bills while simultaneously trying to save for a deposit, this can be a particularly challenging time. The Track Record Mortgage, released by Skipton Building Society, aims to alleviate some of these difficulties.

How to get a mortgage with no deposit:

Specific criteria will apply for all mortgage schemes and as such you’d expect 100% mortgages to be no different. Indeed, when a lender offers 100% mortgages the criteria they set for these will be relatively strict. The Skipton Building Society Track Record Mortgage is tailored to a specific group of would be buyers. Some of the most relevant criteria for their scheme is as follows:

  • All applicants must be first-time buyers
  • Each applicant must be 21 years of age or over
  • The applicants must match those who are renting and have been for the last 12 months (some exceptions apply)
  • There must be proof of rent being paid on time for a minimum of 12 months in a row within the last 18 months
  • A history of 12 months of paying household bills within the last 18 months
  • No applicant must have a record of any missed or late credit or debit payments in the last 6 months
  • The mortgage payment must be less or equal to the average of the last 6 months rent cost
  • Maximum loan size of £600,000
  • Deposit must be less than 5%
  • Not available for new build flats

This list will give prospective applicants an idea of the qualification requirements. The list is not exhaustive, and other criteria will apply. Applicants will also have to pass an affordability test and the lender’s credit score.

100% mortgage interest rates:

The typical method lenders adopt when pricing their interest rates is that of loan to value. The lower the loan to value, the better the rate offered. If you are looking at a 0% deposit mortgage, the rate will therefore be priced that little bit higher.

Interest rates can and do vary from one lender to the next. They are also changing on a fairly regular basis. It is strongly advised that you carry out your research thoroughly. Also, ensure it is up to date, don’t choose your lender based on a rate seen weeks or even days prior to applying.

Check the market on that day. Our advisers are fully qualified and will be able to locate the best option for you when needed. They will also ensure you apply to a lender that you meet criteria. Thus, giving you the best chance of success.

100% mortgage alternatives:

With such exacting criteria you may find that you do not qualify for a no deposit mortgage. Therefore, here are a few alternatives you may wish to consider:

Shared Ownership

This is the government scheme offering part buy part rent. Whilst, for many you will still need a deposit, the amount required is linked to the share being purchased. As such, the cash deposit is proportionately less. There may also be lenders that offer 100% Shared Ownership mortgages.

Gifted deposit

The option of a gifted deposit is often available, and many lenders will accept it, especially if it comes from a family member. However, some lenders may not require the person to be related. It may not always be feasible for someone to simply give you a portion of their savings. In such cases, some lenders offer specific schemes where the deposit is deposited into a savings account in the helper’s name. The amount can be withdrawn after a specified period, usually three years and subject to the mortgage being up to date. Additionally, the money typically earns interest during this period.

Shared living

With the cost of care now beyond many peoples reach, some are opting for the shared living approach. If a family member is looking to downsize in their later years, they may consider buying jointly. Purchasing a property where all can live may offer a solution to all involved.

You can check your affordability by using our Mortgage Affordability Calculator as a guide. Or for advice right away, call our specialist team today on 0330 0945876.

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