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First-time Buyer

UK lender expands zero deposit 100% mortgage to include former homeowners

Nick Cheek
Written By:
Nick Cheek

Skipton Building Society has broadened its 100% loan to value (LTV) product, the track record mortgage, to tenants who have previously been homeowners to offer a “homeownership lifeline”.

In an amendment to its criteria, the lender is allowing tenants who have been homeowners prior to the last three years, who can evidence affordability and with a strong track record of rental payments to borrow up to 100% of a property’s value.

The product was launched in May this year, and was initially aimed at renters trying to get onto the property ladder without the Bank of Mum and Dad or guarantors.

Skipton has received £40m in mortgage applications, with over half of applicants looking to purchase terraced houses and 17% being located in Scotland.

The track record mortgage is a five-year fixed rate at 6.19% over a maximum term of 35 years and tenants can borrow 95 to 100% LTV.

The product is available to tenants aged 21 or above, first-time buyers and those who have owned a home prior to the last three years.

It comes with no fees, and is subject to affordability and credit score, as well as evidence of 12-months of good track record rental history.

Skipton: ‘Helping people own their own homes’

Charlotte Harrison, CEO of home financing at Skipton, said: “Following the successful launch of our track record mortgage for first-time buyers, we have actively reviewed the product and listened to customer feedback, focusing on how we can develop it further to help more people break free from being stuck in trapped rental cycles.

“I’m proud to announce that from today we’re expanding the eligibility of the product to include renters who have previously owned a home.”

She added that there were a number of reasons why people may fall off the property ladder, such as divorce, relocating to a new area, and critical illness and “for many the climb back onto the property ladder can be a difficult one, leaving many trapped renting, even after previously owning their own home”.

“Significant rises in house prices over recent years, on top of the associated costs that come with buying a home, means even after retaining equity from a previous property sale securing a deposit while renting is still a blocker for those trying to get back onto the ladder,” Harrison noted.

She continued that the lender had launched the track record mortgage as it “recognised a clear gap in the market” for people who have a strong rental payment history and can clearly evidence affordability of a mortgage, but there is not a solution due to lack of savings or access to family wealth.

She said: “People trapped in renting is one of the UK’s biggest housing challenges that has a massive impact on the fabric of our society. With escalating rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit – it’s making it almost impossible for people get onto the property ladder.

“In expanding our lending criteria, we’ll be able to help more people to get the keys to their own home.”