A company that tries to encourage people to buy a home in ‘chunks’ says few first time buyers are interested in a 100 per cent mortgage.
Earlier this week the Skipton Building Society unveiled a 100 per cent mortgage aimed at tenants with a proven rental payment record.
It’s a five-year fixed mortgage but it doesn’t require a deposit and is not allowed on new build homes.
Eligibility rules mean the applicant must be a first-time buyer and 21 or older, and needs to have been renting for at least 12 consecutive months out of the past 18 and be up-to-date on all rental payments during this period. There will also be the need to be up-to-date for at least 12 consecutive months out of the past 18 on household bills, such as council tax and electricity or gas.
Applicants must also be up to date on other repayment commitments over the past six months such as Netflix and mobile phone repayments etc.
Now gradual home ownership operator Wayhome claims only 26 per cent of first time buyers questioned in a survey say they would have considered a 100 per cent mortgage when looking to buy a property. And 21 per cent also state that they would be prepared to pay a higher monthly mortgage repayment simply to secure a 100 per cent mortgage.
Wayhome founder Nigel Purves says: “With interest rates climbing and house prices remaining at record highs, the nation’s beleaguered first-time buyers will no doubt be jumping for joy at the prospect of a 100 per cent mortgage. However, the devil is very much in the details and those considering one should be fully aware of just what they are signing up for before taking the plunge.
“Not only are you unlikely to qualify for a mortgage on the house you actually want due to income limitations and lending caps, but those that do make the cut face a far higher monthly repayment cost as a result. With the market also showing signs of cooling in recent months, there’s a very real chance you could find yourself falling into negative equity at the slightest sign of a house price downturn.”
