13 June: Increase Will Reduce Borrowers’ Maximum Loans
Skipton building society is raising the cost of its no-deposit 100% mortgage for first-time buyers but the deal remains available at current prices until Friday, writes Jo Thornhill.
The mutual lender’s Track Record product, a 100% mortgage deal which launched last month, is a five-year fixed rate deal at 5.49%. This rate will be available until 10pm on Thursday (15 June) so borrowers need to act fast if they want to secure this deal.
Skipton says the rate will rise to 5.89% on Friday (16 June).
The rate increase also means the maximum loan a first-time buyer can borrow through the deal will reduce.
This is because the Track Record loan is structured so that the monthly mortgage payments cannot be more than the average of the last six months’ rental costs the applicant has paid.
Track Record borrowers must have a minimum 12-months’ rental payment history. If average monthly rent has been £800, for example, monthly mortgage repayments cannot exceed £800. At a higher fixed interest rate, this means first-time buyers will have to borrow less.
Nick Mendes at broker John Charcol said: “Although the increased rate will reduce maximum borrowing for applicants, the way affordability is calculated has limited how much the first-time buyer can borrow in any case. This product generally suits potential buyers outside of the south east of England.
“While there has been interest in Skipton’s product, in all cases we’ve seen borrowers haven’t taken up the deal in the end when they realise they can’t borrow enough to purchase a property of a similar standard to the one they occupy as a tenant.”
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Source: www.forbes.com
ENB
Sandstone Group
