08/05/2023
Along with many costs in the UK, rental prices have increased, and many people do not have the 20% minimum deposits required. Housing demand is much higher than supply, and for many renters, the thought of ever becoming a homeowner seems a wishful and unrealistic dream away.
To help renters enter the homeownership market, Skipton Building Society has announced a zero-deposit mortgage specifically targeted to existing renters who want to become first-time homeowners.
The Net Zero-Deposit Mortgage will allow people with little or no savings to get a mortgage for their first home, so long as they have a rental history of at least 12 months. Instead of the hefty deposit required to purchase a house, renters will instead need to prove they hold at least 12 months of rental history payments and a good credit score rating. Unlike other zero-deposit schemes on the market, no guarantor from a family member or friend will be needed. According to the BBC, the zero-deposit mortgage will come with a 5.49% interest rate.
Leading Civil Engineering Company, Devine Group provide professional construction services to various companies. One which works closely with Devine Group is Devine Homes PLC, which build individual homes in the South of England, predominantly for first-time buyers.
Devine Group believe many young renters are wanting to become homeowners but just can’t possibly afford to do so. Nigel Jordan, Managing Director at Devine Group, explains, “This is a great step in the right direction. Renters have been struggling for a while, and prices are only rising. We see many young individuals who are simply unable to get onto the property ladder. The ones that can are often only able to do so because of financial help from parents. Saving enough for a deposit whilst renting is almost impossible with the current rental prices.”
Forbes Advisor’s mortgage expert Laura Howard describes the deal as a “Welcome step” towards levelling out the competitive playing field for renters who have historically always been at a disadvantage when getting on the property ladder.
Skipton Building Society offers the scheme to first-time buyers across Britain for tenants aged 21 and over with a rental record of at least 12 months in a row within the past 18 months. Buyers can borrow no more than £600,000 and can't use it to purchase a new-build flat. It could give a huge helping hand to those with a strong rental history but who have been only able to save a little for a first home deposit.
The fee-free mortgage will be at a five-year fixed rate, and the maximum term is 35 years.
The scheme will also ensure that buyers are able to afford the mortgage. They will ensure monthly mortgage payments are lower than their current rental rates. For example, if a renter currently pays £1000 a month to rent their home, they will have a maximum mortgage payment of £1000 a month.
Another disadvantage of the scheme is the high-interest rates. Borrowers will be tied to a 5.49% interest rate, which is around 1% higher than the alternative first-time buyer mortgage loan. It’s a long-term commitment to a higher interest rate, and charges apply for breaking the term early.
Nigel Jordan says, “The house building sector is an imperative part of the United Kingdom’s economy and services an ever-growing requirement for modern sustainable housing. At this time, all initiatives that deliver solutions for the sector and help businesses and individuals deliver on their property and ownership dream is a good thing.”
Devine Group is a privately owned Group of Companies established in 1974. Every successful business needs a solid foundation to build from. In June 1974 the owner and Chairman Mr. Jim Devine set out to build a group of companies based on a rock of financial stability. Minimal debt, cash reserves and an attitude to continually reinvest back into the business. Our core business elements are Infrastructure, Groundwork, Plant Hire, Development.
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