Skipton Building Society Expands ‘No Deposit’ Mortgage Deal to Former Homeowners Turned Tenants

Former homeowners turned tenants can now get a hand on the property ladder, according to a building society.

Skipton Building Society is expanding the pool of aspiring homeowners who can apply for its landmark mortgage, to support more ‘renter traps’.

This decision could potentially help people who have already left the property to return to the rental sector due to a divorce or the need to move, for example.

The ‘no deposit’ mortgage deal had already launched in May, aimed at first-time buyers, and since then Skipton said it had received more than £40million in mortgage applications.

So far, more than half of applicants have bought terraced houses and almost a fifth (17%) of applicants have settled in Scotland, the company said.

Skipton announced on Monday that people who previously owned but haven’t owned a home in the past three years can now also apply for the deal, as well as first-time buyers.

The company’s historic mortgage is a five-year, no-cost, fixed-rate product with a rate of 6.19%, for a maximum term of 35 years.

Figures from Moneyfactscompare.co.uk released on Friday last week showed the average five-year fixed residential mortgage rate in the market was 6.19%, although this was across all deposit sizes, while with the Skipton deal, people can get the property ladder without bail.

When the deal launched in May, the company made it available to all first-time buyers across Britain. Tenants aged 21 and over can take out a mortgage for between 95% and 100% of the value of the property they wish to purchase.

In return, they will need to demonstrate a strong track record of paying their rent, with proof of a minimum of 12 months of rental history.

This proof could be provided through bank statements or a letter from a duly registered rental agent, for example.

Skipton said that as a responsible lender, he ensures that each applicant’s monthly mortgage payment does not exceed the average of the last six months’ rental fees they have paid.

For example, a tenant paying an average of £800 per month over the last six months would have a maximum monthly mortgage payment of £800.

In the terms and conditions of the landmark mortgage agreement posted on its website, Skipton said it would not lend on new apartments, but would accept applications for new homes.

Charlotte Harrison, CEO of Property Finance at Skipton, said: “Following the successful launch of our mortgage for first-time buyers, we have been actively reviewing the product and listening to customer feedback, focusing on how we can develop further to help more and more people break free from the trap of rental cycles.

“I am proud to announce that starting today, we are expanding product eligibility to include renters who have previously owned a home.

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“Unfortunately, there are a number of reasons people lose the property ladder, from divorce to moving to a new area, even serious illness. However, for many, moving up the property ladder can be difficult, leaving many stuck in renting, even after previously owning their own home.

“The significant rise in property prices over the past few years, in addition to the costs associated with buying a home, means that even after retaining equity from a previous property sale, getting a deposit while renting remains an obstacle for those trying to re-enter the real estate market. the scale.

“We launched our historic mortgage because we recognized a clear gap in the market for people who have a solid track record of rent payments over a period of time and are able to clearly demonstrate that their mortgage is affordable – but there was no solution for them. buy a property for lack of savings or access to family assets.

“People stuck in renting are one of the UK’s biggest housing challenges and have a huge impact on the social fabric of our society. With rising rents and falling costs of living further affecting people’s ability to save for a mortgage deposit – it’s making it nearly impossible for people to get on the property ladder. By expanding our lending criteria, we will be able to help more people get the keys to their own homes.