Skipton Building Society recently made a bold announcement that it would offer 100% mortgages to first-time buyers in the UK. This move is significant because it provides an opportunity for individuals who may not have the funds to pay for a down payment on a property. This announcement comes at a time when many people are struggling to save for a down payment on a home, especially with rising property prices.
A 100% mortgage means that the borrower can borrow the entire cost of the property they wish to buy, without having to put down a deposit. This move by Skipton Building Society is not unique, as other lenders have also offered similar products in the past. However, it is noteworthy because it is one of the first mortgage providers to re-introduce this type of mortgage since the financial crisis of 2008.
It is important to note that a 100% mortgage does come with risks, particularly for the borrower. For one, a 100% mortgage often comes with a higher interest rate than a mortgage with a down payment. Additionally, the borrower is more exposed to negative equity, which occurs when the value of the property falls below the amount of the outstanding mortgage.
Despite these risks, a 100% mortgage can be an attractive option for first-time buyers who may be struggling to save for a deposit. It is also worth noting that Skipton Building Society has stated that it will only offer these mortgages to borrowers who can demonstrate that they can afford the repayments.
In conclusion, Skipton Building Society’s announcement to offer 100% mortgages is a significant move for the UK property market, particularly for first-time buyers. While there are risks associated with a 100% mortgage, it is a viable option for those who cannot save for a deposit. It will be interesting to see if other mortgage lenders follow suit and introduce similar products in the future.
If you would like to find out more, please contact independent mortgage broker Mike Bowcock on mike.bowcock@mab.org.uk or tel: 07737 409934
