Aspiring homeowners have always been faced with the challenge of saving up enough money for a mortgage deposit. But with soaring rental costs and the impact of the cost of living crisis, many people have found it more difficult than ever to overcome their financial hurdles. 

In a recent move to revolutionise the rental market, Skipton Building Society has launched its new ‘Track Record Mortgage’. The initiative is a deposit-free mortgage and it is designed to bridge the gap between renting and ownership, providing a pathway for aspiring homeowners to step onto the property ladder. 

What is a Track Record Mortgage?

For many people, renting has traditionally been the preferred method of home ownership. However, after recognising the difficulties faced by renters, Skipton Building Society has introduced the Track Record Mortgage to allow people to make the transition from renting to owning a home. 

Unlike traditional mortgages that heavily rely on the provision of a significant upfront deposit, the 0% deposit mortgage redefines eligibility criteria. It takes into account an individual’s consistent rental payment history as a valuable indicator of financial responsibility. By proving that they can meet monthly mortgage payments, a buyer will be offered a mortgage equivalent to the property’s value. 

And while a handful of other deposit-free deals are available, they do need the financial backing of family or friends. The Track Record Mortgage by Skipton Building Society does not need a guarantor, which is the first of its kind to launch since 2008. 

The five-year fixed mortgage works similar to other mortgage deals on the wider market, in that you are charged the same interest rate for a five-year period. The competitive fixed interest rate is 5.49%, with a maximum repayment of up to 35 years.

Who Is Eligible For The 0% Deposit Mortgage?

The 0% deposit mortgage is designed to make homeownership more accessible and inclusive. To be eligible for the scheme, there are several requirements, you must:

  • Be a first-time buyer.
  • Be 21 years of age or above.
  • Have a minimum of 12 consecutive months of rental history within the past 18 months which are up to date. You will need to prove this via bank statements or confirmation from a letting agent. 
  • Be up to date on your household bill payments, such as council tax, electricity, and/or gas, for at least 12 consecutive months. You will also need to provide evidence of this through relevant documentation. 
  • Not have missed any other repayment commitments in the last six months.
  • Not be looking to purchase a new build flat. 

What are the Benefits of a 0% Deposit Mortgage?

The innovative zero-percent deposit mortgage option opens doors for potential homeowners and offers numerous benefits, including overcoming the deposit hurdle, increased affordability and cash flow flexibility. 

The most apparent advantage of a mortgage without a deposit is that it eliminates the need to save a substantial lump sum for a deposit. Typically, lenders require a deposit of 5 to 20% of a property’s value, which can be a significant barrier for a first-time buyer or those stuck renting. With a Track Record Mortgage, borrowers can secure a home without the financial burden of a deposit.

Furthermore, by not needing to allocate a significant portion of savings in a deposit, borrowers can maintain greater financial flexibility. The funds that would have been allocated to a deposit can be used for other purposes, such as home improvements, furnishing the property, or even starting a business. This additional cash flow can provide a sense of security and the ability to respond to unexpected expenses.

Owning a home also allows individuals to build equity over time. With a 0% deposit mortgage, homeowners have the opportunity to start building equity earlier, in a way they would not have been able to do with renting. As they make mortgage payments, each payment will go towards reducing the principal amount owed, increasing their stake in the property. This can also provide a sense of stability and a stepping stone towards future property-related endeavours.

See what mortgage offers are available to you

Find out how much you can borrow by clicking here. A mortgage specialist from DNA will then be in contact to discuss your requirements.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Subject to individual lender terms and conditions. Our usual reservation and sales terms and conditions also apply.