Building societies in the United Kingdom have introduced a mortgage without a down payment for renters.
There are a few other no-deposit deals available, but they all require the support of family or acquaintances.
Skipton Building Society demands 12 months of on-time rent payments and good credit, but no guarantor.
However, at 5.49 percent, the interest rate is higher than the average five-year fixed rate of 5 percent.
Generation Rent, an organization that advocates for private tenants, asserts that the lack of affordable properties within the budget of first-time buyers remains the most significant obstacle for those attempting to climb the property ladder.
Will Barber Taylor from Generation Rent states, “If there aren’t more houses available for purchase, it won’t necessarily help all the people who are looking to buy their first home.”
Moneyfacts reports that 15 other zero-deposit options make up 0.3% of the UK market.
Initial purchasers face an insurmountable battle. Rent increases have made it increasingly difficult to save for a deposit. While the government’s hallmark Help to Buy program, designed to assist first-time buyers, is no longer available.
The Skipton, the fourth largest building society in the United Kingdom, claims to have identified a “market gap.”
Stuart Haire, the society’s chief executive, told that “until now, there was no way for them [renters] to purchase a home due to a lack of savings or family wealth.”
David is renting in North Yorkshire with his spouse and newborn child. “With rent prices, it’s incredibly difficult to save up for a deposit,” admits David.
Why can’t I get a mortgage if I’ve been renting for ten years?
Under the Help to Buy program, the Treasury lent homebuyers between 5 and 20 percent of the price of a newly-built property, and up to 40 percent in London.
In October 2022, the scheme was closed to new applicants, but there are rumors that something similar could be reintroduced.
However, riskier mortgages with a high loan-to-value ratio caused the 2008 financial crisis, therefore some may oppose zero-deposit mortgages.
According to mortgage expert Andrew Montlake, back then lenders were more concerned with quantity than quality.
As long as 100% loan-to-value mortgages are “underwritten sensibly” in the last 15 years, he believes that “the world has changed dramatically.”
