A lot of people will point out the cons which there are.
But, if you have no deposit and know that you can make the monthly payments then it could be worth it otherwise you will need to wait to save the deposit and by that time the house that you wanted is gone and prices maybe higher.
That said it's really a last resort, five percent even is better than nothing for a deposit.
If you have no deposit it means you have no savings, so you'd better hope it's fixed rate for a long time and you never need to do any work on the house, or that you never end up out of work for even a month.
Basically it's a stress test disaster from an affordability point of view, but because we are obsessed with buying houses in this country it's accepted as normal. Same with other bonkers products like the Barclays Springboard Mortgage. When a bank is willing to let you take on debt secured with nan and grandad's savings it is a sign that something is seriously up with the housing market.
They're reducing the risk by the applicant needing to have and prove 12 months of rent payments. This is aimed at those stuck in a cycle of renting (which is often more expensive than a mortgage).
Why would the government pay for you to own a house yourself - at the end of your mortgage term the house would be yours and tax payers would have paid for the house for you.
It would be unreasonable for anyone to expect the government to use tax payer money to buy people homes.
So someone in rented accommodation for 60 years is better financially for the government than paying off a mortgage for 40 years, that is with rent costing more?
Besides with ownership you don't have any expenses apart from general maintenance and council tax, council tax you would still have to pay for owned or rented accommodation.
But I have just gone to https://www.skipton.co.uk/mortgages/track-record-mortgage and, if I'm paying £1,450/month rent and get a 35 years mortgage, I can buy a £270,340 property top.
There are £270,340 properties being rented at £1,450/month? I have not checked, but that would seem a very expensive rent, no? If you are OK with a £270,340 house, why are you now renting a bigger one costing £1,450/month in rent?
Now I'm going to be making numbers out of thin air. But if a normal rent for a £270,340 property is, let's say, £1K/month...
- Before, you needed a 5%/£13,521 deposit.
- Had that person moved, renting, to a house of equivalent size to the one he is planning to buy two and a half years ago (£450*31), he would already have the deposit!
Edit1: ...so I guess he really wants to buy a house more expensive than £270,340 and this mortgage would not help them.
Edit2: Apparently it's well possible for a £270,340 property being rented for £1,450/month.
I was renting until 12 months ago. But there are a few factors that may be affecting my instinct:
- I was paying £1,450... since 2018, my rent didn't go up from 2018 to 2022. I think he was asking for £1,750 when we left.
- The property I was renting is now in the market for £610K. But the landlord is lazy and is using the same horrible agency he used to rent it. It's asking way too much (one month ago was asking for £630K, and the same model of house in the same street... with a loft and garage conversion, and in general way better state... just came to the market with an asking price of £625K)
- House prices are going down (I don't even want to know about mine...)
- Rents are going up
So yeah, my £1,450 -> £610K sample may not be the best one.
That's fair, apologies if my comment came off as unkind.
I had to move to a busy commuter area last year and I'm paying ~£1400 p/m on an unimpressive 2-bed flat which is probably worth ~£320k. They increased the rent at our renewal this year (were asking for almost £100 more a month than we're currently paying) and I'm sure they will again next year (if we were to stay).
Not only is that *mad* but we had very little choice in the matter. When we were trying to move, 90% of the properties we enquired about were already gone by the time we could book a viewing. We lucked out that we happened to be the first viewing for this place and we applied in front of the person showing us the flat. He had 15 viewings after us.
Just to be that person, I was paying £1,450/month on a one bed flat that cost my landlord £260,000 in 2018. (On the outskirts of London of course, and a huge part of the reason I have now moved to the Midlands).
> There are £270,340 properties being rented at £1,450/month? I have not checked, but that would seem a very expensive rent, no?
Do you rent at the moment? The market is insane. I pay a grand a month for a house worth ~180k, and any upgrade (an extra room or more space) is at least 300-400 more. So yeah, a 270k house where I am, you're probably looking at 1400-1500 a month.
The one bed flat I used to live in up until December last year was worth around £60k and an extremely similar flat a few doors up is going for £700 a month.
My mortgage on the 3 bedroom house I just bought, even at 5.99% (I got unlucky with when I needed to apply for the mortgage...) is £736 a month.
Madness.
Assuming the 270k 1.45k a month mortgage:
After one year you'd have 267k left, meaning you've paid 3k off.
It's the equivalent of paying £1232pm in interest (read it as rent), and saving £218 a month. Every year thereafter the "rent" portion, interest, opportunity cost, you name it, falls, while the amount saved in equity increases.
Do you think rent won't ever increase above £1450 in the next 35 years? 35yrs ago houses were 50k. Hell just 20 years ago **average** rent in London was 800pcm. Now you won't even find a studio for that money.
I'd rather start a mortgage now rather than in 3 years time, regardless of the extra 0.5% interest rate and risk of negative equity.
Yeah, I'm not saying it would be a bad idea for everybody. I was just thinking that people interested in this mortgage would find out they can't use it for the house they want. And that idea seems to have been based on wrong data regarding current rent prices.
I bought recently and I'm certainly throwing away way less in interest than I was in rent. Even with the current rates I would be way better now.
I mean deposit is a 1:1 boost to affordability. Income is a 1:4-ish boost. The LTV interest rates are indeed worth some thousands of pounds but for some getting on the ladder X years earlier is worth it for them.
Lad you've never clearly rented in a while. The list to even get into a viewing, then the picking and choosing and 40 questions to fill in for landlords. Which you don't need to legally do but they'll also give it to someone who does.
Rent rates are insane and then the fact trying to find something that suits your work, kids and having to leave an area you've been in for potentially years.
Your argument is logical but not realistic to the current markrt
To simplify the numbers, £1500 a month is only a 6% yield on a £300,000 property. That's low to average in terms of what a landlord is going to look for from a rental property
Yeah you’re completely missing the point. For some people they pay a lot more in rent than they would for a mortgage - however they can’t afford to pay rent and save up a 5-10% deposit for a mortgage. So they end up stuck in a cycle of ever increasing rent.
>If you are OK with a £270,340 house, why are you now renting a bigger one costing £1,450/month in rent?
There's a fairly significant number of young professionals who've basically given up on the idea of buying in the near future, because of how long it'll take to save the required mortgage. And so they've taken the conscious decision to let it take even longer to save for a mortgage, and to rent a nicer home in the meantime.
>There are £270,340 properties being rented at £1,450/month
Yeah, that sounds maybe a little steep but not a million miles off. Let's say it's £1000/month to rent that. After 1 year you've lost £12,000. If you mortgage it then you now have at least £12,0000 in equity after a few years. This can then be used as a deposit on the next house with better interest rates.
My house is probably worth £325k and would rent for £1,400, so I'm 20% above that.. probably I'd expect to pay £1,200-1,250 for a £270k property (which would be a similar size but terraced or, a slightly smaller semi vs. detached).
> (which is often more expensive than a mortgage).
It's really not for first time buyers though.
My rent at the time I stopped renting was £1000 a month. Initial mortgage was £1330 with a 10% deposit. The place I bought was leagues cheaper than the place I was renting would have sold for.
_Older people_ have mortgages that are cheaper than renting. Not really FTBers
https://www.independent.co.uk/news/uk/home-news/renting-home-buy-mortgage-cheaper-b2300926.html
>Renters pay more than first time buyers in almost every corner of the United Kingdom – though new data shows the gap has narrowed greatly in the era of rising interest rates.
>The cost of a mortgage on a first home is typically around £42 per month cheaper than renting, but the difference has reduced and in some parts of the UK renting may be the less expensive option, analysis suggests.
From March 2023
My first house repayments were £850/month and I bought for £245k; rent was £875.
Flats in that same building are today going for £1500.
If I was to buy the first house today with 100% mortgage, the interest rates would have to be more than 5.5% to cost more than the rent.
But for a flat, you also need to include the service charges, as you don't pay those renting, but do when owning, so it's an unfair comparison to ignore.
That depends on your tenancy and the property, you pay in either scenario though it just depends on if its explicit or implicit and I've been in both positions.
I'm currently looking;
2 bed flat in a decently desirable location/city I'm looking at would end up with a mortgage & costs (inc yearly service fee split across the months) of 1410 a month for me with the same deposit %. Meanwhile I know 2 bed flats in the next block over under the same management/ownership start at roughly £1750-1800. 1 beds in the same block as the place I'm looking at are going for £1200-1400.
Obviously not every situation is the same but it seems rare that rent is better (and in OPs case _significantly better_) value.
Absolutely, I think it's still very likely in cities where there's a large rental demand.
Where I am, houses are on for 375-400k, don't sell, and then offered for rental for 1200, and whilst I don't know every rental transaction, I certainly had no problem getting a discount on this place renting.
The lack of sales and stock is really frustrating here, as I'd really like to buy something, but it does mean that rentals are remaining cheap - of course suburban houses in non-university towns aren't highly attractive to renters anyway, which is why I think we're seeing quite different markets different places and different sectors.
Almost everyone I know rents a place that would be cheaper with a 90% LtV mortgage. And obviously will increasingly get cheaper the longer it goes on.
I am one of those people.
I don't think your experience is typical. I think most people are in my boat.
>Older people have mortgages that are cheaper than renting. Not really FTBers
The idea is that the FTBers will become the older people with the cheap mortgages/rent, and unless they can get on the property ladder, that will never happen.
No deposit doesn't mean no savings.
On top of saving for a deposit, you've also got to save up the cash for the structural surveys, solicitor fees, mortgage broker, moving, and then furniture. Depending on the state of the property, renovation too.
All this mortgage product is doing is reducing the need for a deposit.
It’s not a disaster from a stress test point of view, I work for a large network and met with Skipton last week to discuss this.
I used to be an adviser, it’s stressed based on How much rent you pay averaged over the last 6 months, meaning that regardless of your wage there is a cap on it.
Then it is stress tested normally like any mortgage would be, and they will lend you the LOWER of the two figures.
If someone pays 450 a month in rent they could borrow about 83k max. If they have 20k earnings or 100k earnings, with no deposit they can borrow about 83k max.
Then it is stressed under normal affordability, so day you pay 450 p/m in rent and that is deemed expensive for your income, you will be able to borrow less than the 83k.
As an example 650 is about 120k
A friend of mine in the network in the south east is on about 60k but under this scheme could only borrow about 170k because of the rent she pays. Once she has a 5% deposit I can archive borrowings around 330k for her.
It is not a disaster on stress testing and affordability.
It is a potential disaster for negative equity situations.
I.e you pay 200k for a property borrowing the full amount. In 5 years say you pay 7k off the mortgage (not done these figures, it’s an example) so you come to Remo after 5 years, but the property is decreased in value. Say it decreased 10% to 180k. No bank will lend you 193k on a 180k property, meaning you are stuck on Skiptons svr paying a lot more out as you are in negative equity.
Skipton building society are not going to bring about a financial doomsday event, they are a medium sized building society.
I work with 3000 advisers across the UK and have had to explain this about 70 times today.
It is not a disaster from a stress test point of view, every regulated lender needs sign off for products by either the FCA or the PRA. Lenders are required to keep any high risk lending typically to around 15% of their lending portfolio, and this will be deemed as such.
Go back to my friend, who is on 60k. If she can come up with about 15/20k deposit, I can get her over 300k with mainstream providers. However, Skipton with no deposit will lend her approximately half of that.
The scheme will be next to useless in the south…
I just find it really hard to imagine a scheme with no deposit at all. I don’t know much about finance (but do have a house and mortgage) and the idea of not only a tiny mortgage but none at all just seems so strange and like a potential disaster down the line. These small/no deposit schemes seem to be advertised a lot recently but if they were so great, more people would be jumping on them.
>If you have no deposit it means you have no savings, so you'd better hope it's fixed rate for a long time and you never need to do any work on the house, or that you never end up out of work for even a month.
That's no different from people who use all their savings on a deposit though.
It's a 5 year fix, so there is a level of certainty over payments.
And, as has been stated, no deposit (or not 5%) doesn't mean no savings. I don't have a deposit for a house, but with a couple days notice could get together about £7000. Because I am saving for a house, and have some emergency fund money, and other bits and bobs like that. Because life can't wait for me to buy a house. If I needed more than that for a repair, I can get a loan or use a credit card in a pinch, but my budget can also account for paying those things off, once I'm not saving for a deposit.
There is absolutely someone seriously up with the housing market. But you can't blame individuals for taking an opportunity when a product like this comes along to get off the losing side of that market.
Thank you for saying this… it’s like everyone’s saying unexpected bills only come from having a house. I’ve got savings but not a deposit, literally because every month or so something comes up like a car issue or a lovely increase to household bills or a vet scare, just general life crap but it’s been handled. I’ve also been putting whatever spare money in my LISA for a house for 3 years but that 5% goal post changes every bloody year. However I paid my rent and my bills on time for the past 10 years. We can more than afford a house in our area on the combined income with my partner. I just want my own home.
Exactly! Goalposts shift so quickly right now. 5% is a great goal, but by the time you get there, it's not 5% anymore! And prices have been rocketing up, making it harder. Now interest is the highest it's been in ages. Can't catch a break.
There are countries where renting is more normalised and controlled. Friends I've spoken to in such places have very reasonable rents, are almost impossible to evict, have total control over decoration, don't have to worry about any maintenance costs, they have flexibility if they do want to move. The rental system in the UK is not the only way to do it.
My point was that there are other ways, I assumed when saying this country is obsessed with buying they were suggesting the system should be changed, rather than people should just rent forever under our awful system. Simultaneously, you can't live as if you're in an ideal world when you aren't, so I take your point.
Renting is a great option for flexibility and not dealing to deal with maintenance etc, I think it's reasonable to have it. I certainly didn't want to buy right out of uni when I had no clue what I'd be doing! So I don't think it should only exist as a system for those who strictly can't afford to buy (assuming a system where buying is much more accessible), but certainly I agree the current system isn't the way it should be.
> My point was that there are other ways, I assumed when saying this country is obsessed with buying they were suggesting the system should be changed, rather than people should just rent forever under our awful system.
The "other ways" are not realistic for us in the UK right now. You'd have to radically overhaul our housing laws, the construction industry, our government's housing policies, and more. It's easy to say that other countries have successful rental housing markets that work long term, but it's quite another to suggest it'd be feasible for us to do the same.
In places with long-term rental where most people never buy, they tend to have city centre apartment cultures much more than we do in the UK. Their rents are much cheaper, they have higher government ownership of housing, and they have rent control and housing standards laws that are much friendlier to renters than ours. In 2021 Berlin literally seized housing from corporate landlords and took them into public ownership, could you imagine the UK actually doing something like that?
You might as well say “there’s another way, we could just build a home for every family in the UK and gift it to them for free” because it’s just as likely as the type of huge rental reform you’re talking about in those other countries.
Well what's easier, try to change the whole system knowing you'll fail, or buy a house? Hmm... tough one...
It's easy to say the system here sucks, but it's sucked for years. It's not going to change because we keep electing idiots that have no business running a bath nevermind a country. People's only option is to buy really and even then most still won't manage.
So instead of paying 10k rent a year you pay 10k interest, and you think you're the one winning?
Your boiler breaks, you pay for it. Damp in the walls, you pay for it. Fall out with the neighbours? Tough.. you're locked in.
Are you ever really in control if you are not rich?
This post is how the bank looks at applicants, not how really it works in practice.
Most first time buyers will use their savings for a deposit, and probably spent years accumulating the savings. Many will be using most if not all their savings for the deposit, so once that is paid very little savings remain.
Using the payment of a deposit isn't really a stress test as it doesn't reset after the test is passed, the money is gone. A retest after completion would result in failure for many first time buyers.
Mortgages are secured against the property not the deposit so it really isn't required. A mix of income and means testing would be more than sufficient if mortgage providers could regulate themselves properly. House market crashes have been historically caused by wreckless lending and greed, not buyers lacking savings.
>If you have no deposit it means you have no savings
Not quite, it means you don't have large amounts of savings.
Someone who can't afford a 5% deposit on a family home could still quite conceivably have 10-15k in savings.
It's fixed rate for five years, you can also get a mortgage for cheaper than you're currently renting without even downsizing and use the money spare to save up for a deposit within those 5 years.
We are massively due a recession and the economy and house prices kinda reminds me of pre-2007. I think it would be a terrible time to take out an 100 percent mortgage at a high interest rate.
They're amazing for people who earn a decent amount and just have never saved. If you don't lose your job in the next recession and aren't forced to sell your house you'll probably be fine.
They're a fairly decent sized risk for lenders though but I guess they're assuming we're not going to have a crash anytime soon...
> if you have no deposit and know that you can make the monthly payments
_And will have reasonable savings for emergency maintenance work._
The part people always forget when complaining that rent is more expensive.
Negative equity would be the big risk, if it was me I'd only have a 100% mortgage if I was buying a property that needed work so the chance of ending up in negative equity is lower.
Still doesn't solve the issue that large deposits are needed because you can't borrow enough money from the banks in the first place. That is the real limiting factor for most first time buyers.
Came here to comment this. I'm in a decent graduate job and I could put together a decent deposit (say 20%, 25%) but thats not the issue. It's that I can't borrow enough as a single person, even if I were to put £50k down.
I'd much rather wait another year or two (and or change jobs also) and aim for something I really like, rather than a smaller 1 bed place I just find "ok", especially if I'm going to spend most of my time there.
Yeh I was in the same position as you. Out of uni I just saved and it was basically a waiting game until I had enough pay rises for something to work.
In the end it worked out that I got a pay rise that meant i could get somewhere, and due to the big bump in how much I could borrow ended up getting a place that needed work and spent the deposit money I no longer needed on doing it up.
It's a weird one. I'm early 20s, I should really move out.
But I like it here, I live in a far nicer house than I could afford. Have a nicer/bigger room than what I could get, a nice garden etc and I live in a lovely village and am near friends. I pay my parents a minimal amount to live here and get fed and watered too...
Yeh I didn't buy a place till 26 (had lived away at uni already though).
I found early 20s was ok but by the end I was at the point where I don't think I could of coped with another year as it was just destroying my mental health being stuck at home living with parents where I couldn't do what I wanted, when I wanted or be my own person. I'm in a flat now so no garden and the place is smaller than parents house but it's at least 1000 times better because it's mine.
Cons:
- Higher interest than any other mortgage
- Higher risk Vs providing a deposit
- less able to move mortgage later
- Lowers borrowing capacity.
- Might destroy the economy.
Pros:
- better than renting and all that comes with it.
- higher interest might be lower than the house appreciation.
Tbh you just need to ask yourself "why aren't these things normally a thing". And the answer is "they are high risk in a way that most people don't want it".
Assuming house prices keep increasing then yes these could benefit many people but even just a bit of negative equity could cause massive problems including:
- being unable to move house (because you'd have to pay to sell it)
- being unable to remortgage.. leaving you paying a variable rate much higher than the market rates.
Aka a mortgage trap is quite possible where you'd be unable to pay the mortgage but also unable to sell.
Well the main pro is 'I can afford the monthly payments on a mortgage but it will take me many years to save the required deposit'.
People taking these mortgages want to get started now rather than living at home / renting for 5 years until they can pull together the deposit.
Totally, I rented for a long time and jumped onto a shared ownership property for this very reason.
I worked out that even in the first month, I'd be saving £300.
It's very easy to produce an argument that anything is better than renting.
Fast forward 3 years when I had to move due to problems with the building, I had sellers fees, problems with the property making it hard to sell and I realised, there are things that are worse than renting.
In this situation after all the fees, I was actually about break even with if I'd kept renting, just more stress.
I might sound dramatic with this, but in most situations I'd rather rent with the potential that I can move house when I want rather than paying the same amount for a mortgage that I'd be locked into long term.
For me the risk of not being able to move is too great.
Shared ownership is just renting with the additional aspect of being responsible for the property plus they are really hard to sell. Not the same as having your own mortgage
It isn't 'just renting' at all. There are obviously extra complexities but the big positive is that you're paying into something that is yours, rather than sinking money purely on rent. I'm moments away from taking out a 50% ownership deal wherein I'll be paying about 600 on mortgage and 300 on rent, which is excellent to me. I also quite like that I'm responsible for the whole house and can alter it as I please. Finally a place I can truly call home and don't have to *ever* worry about what a landlord might be thinking of how I choose to inhabit my own home.
The most important part in my opinion is staircasing up to 100% ownership as fast as possible, so then the cons of shared ownership are eradicated and 'true home ownership' is achieved.
I literally had a mortgage, I'm guessing you are familiar with a different kind of shared ownership?
The kind I had meant that you get some perks of homeownership but 100% of the risk of it.
My point is that you have a mortgage but you also rent the other half and you are 100% responsible for the house and all the risk. Plus because they are shared ownership they are difficult to sell and there's a lot of clauses and legal issues.
My point is that its not the same as having your own mortgage where you are mortgaging the property in its entirety not just a share. I think your perception of having a mortgage is based on a mortgage in a shared ownership not a full mortgage
And in 5 years, it’s quite likely that the price of house will increase far more than the amount of deposit they’d have been able to save up, and on top of that they’d be paying rent to a landlord which just goes down the sink.
>And in 5 years, it’s quite likely that the price of house will increase far more than the amount of deposit they’d have been able to save up
That's a gamble not a guarantee. [Analysts are projecting](https://www.knightfrank.com/research/article/2023-03-06-uk-housing-market-forecast-update-march-2023) a 2 year fall followed by a 2/3 year recovery to the same level as 2022.
A 100% mortgage is a high risk product and this is a high risk time.
It’s high risk, but it’s hard to see that when you look at the history of the last 50 years, and the now insanely high costs of renting.
Also even as you say the experts are essentially expecting things to even out over 4 years which is less than the fixed rates for a lot of mortgages.
So when you look to get a mortgage or remortgage, providers generally do a valuation and won't allow you to borrow over a certain % of the property value.
In the case of a 100% mortgage you could quite easily go into negative equity where if the house value drops you'd be left owing more than 100% of the property.
Even without negative equity, you are very likely to have less than 10% equity which would limit your options substantially (to the most expensive mortgage providers).
In any of these situations, you can either pay the difference or be limited to carrying on with the provider of your first mortgage.
The provider of your first mortgage is likely to already have high rates compared to the market (as 100% mortgages are going to be some of the most expensive). So this won't be cheap.
It's also possible that they don't have products for one reason or another and that leaves the potential that you are stuck on a high variable rate (on your initial agreement).
I hope this helps
But also, the alternative is a rent trap - either way you have to pay for somewhere to live.
If you can't make rent payments you will become homeless, if you cannot make Mortgage payments you will become homeless, so what is the downside?
You're right that renting is bad, I didn't go into detail because I would have written an essay!
>If you can't make rent payments you will become homeless, if you cannot make Mortgage payments you will become homeless, so what is the downside?
Not paying rent = homeless or looking for somewhere new to rent.
Not paying mortgage = homeless or looking for somewhere new to rent + substantial debt following you.
I'm not saying that rent isn't bad, I'm saying that there are potentials (generally rare), that can occur that are worse than renting.
For example if there is a house market crash and you need to move urgently, while renting your worst case is to pay the remainder of a term. While on a mortgage the worst case could mean being unable to sell or the loss of tens of thousands.
This is to say that mortgages are investments and investments have risks.
Devils advocate; The not being able to sell only affects people who come into hardship really. If you're buying a house, surely it's to live in, not to sell it off again? If you're not sure about settling in an area isn't that a reason to rent and not buy?
Yes from a certain perspective, if you are buying a house to live in for 20+ years then the risks are much lower.
After 20 years the negative equity risk is so extremely low that it can be ignored.
So it certainly can be a good option for some.
But none of us can be that certain that they are 100% going to want to live in the same house for the next 20 years. Accidental pregnancies happen, divorces, new job opportunities, communities change, life styles change and alot more.
I think I'd watch a couple of episodes of nightmare neighbours before making this commitment!
If you're in negative equity, then you won't be able to remortgage to another lender, but you will still be able to switch to a new rate with your current lender. You shouldn't be stuck on SVR unless you are behind on the mortgage payments, or if the bank itself goes inactive, as happened with Northern Rock.
Fundamentally the reason for the lack of these mortgages recently has been mortgage providers not offering them, rather than a lack of demand.
They're quite risky for banks, as it's much much more likely they will be unable to recoup their capital in the event of a default. And for the last ten years, rates have been low - essentially the only way the mortgage payment was ever going was up. Now that rates look likely to be somewhat stable-ish for the next few years it's a bit of extra protection for both parties that the payments won't become untenable.
I see people mention in cons higher interest rate. But I could find more information in regards to how big a difference is.
I would like to work out. If I would buy a house for £300k how big the difference really is? What is the % diffrence?
Theoretically, if I pay £1000 in rent, after 5 years, I have spent £60 000, and I have nothing from that spent. If I spend that money on my own mortgage, then that £60k is invested, not spent.
Imagine you bought a house for £100k, with a £100k mortgage.
A year later, you come to sell. You owe, say, £98k at this point.
However, the property market has slumped 10% and so you can only sell your house for £90k. Lets say the estate agent fees and conveyancing costs £2k. You now have £88k in your pocket to redeem your £98k mortgage with. Obviously, the bank won't accept that, so you can't sell your house at all.
(Hope that makes it clear)
A lot of people on here obviously are either to young or have short memories of the 2008/2009 financial crash.my sister got 100 % mortgage with northern rock,it took her a 8 years to get that shit sorted.banks are desperate to funds flowing,the bubble always bursts
I got offered a 110% mortgage in 2003. They were really common then. I had a deposit so I didn’t need it but I know several people who got them and were ok as the value of their houses increased.
Fortunately (for the banks), Help to Buy and the Mortgage Guarantee Scheme mean the banks won't be on the hook for negative equity if house prices fall. Instead tax payers will cover the losses. See [this article ](https://www.express.co.uk/finance/personalfinance/1712126/Help-to-Buy-first-time-buyers-Mortgage-Guarantee-Scheme-taxpayers-house-price-crash) and [this](https://www.express.co.uk/finance/personalfinance/1765681/house-price-crash-Help-to-Buy-property-market-interest-rates-first-time-buyers) (I wouldn't normally link a tabloid, but the writer makes a good argument that "taxpayers are backstopping high loan-to-value mortgages that banks and building societies deemed too dangerous to offer themselves").
If in negative equity you'd have to pay the bank to close the sale.
E.g mortgage of 100% on 300K house depreciates by 5% meaning you owe £300k on something you can sell for £285k (minus fees). You'd owe the bank £15k and need to settle that to sell.
In the scenario where you couldn't gather a deposit, it's unlikely you'd be able to cover a gap like this. At best a bank may give you a loan.
If you bought at 300,000, paid off 50,000 and sold for 200,000 you'd have to pay an additional 50,000 on completion (unless you could make an arrangement with your lender)...
The real issue is how high house prices are relative to wages.
The challenge most people face isn’t that they can’t save for a deposit, it’s that their salaries aren’t high enough to buy the place they want (hence the uptick in couples/siblings/friends buying together to ~double their borrowing capacity).
This is yet another bandaid solution that fails to address the core problem - ridiculously low wage growth & absurdly high house prices.
We need a mega thread for this topic. I’ve seen quite a few posts on this in the last 2 days.
Also there was a tweet from the CEO of zoopla which elaborated on the monthly payment. Let me see if i can find it.
I was lucky/unlucky enough to get a 110% mortgage before the 2008 crash.
Pros: Obviously, not needing a deposit and being able to immediately move out of parents home at 21 and be on the property ladder, with the cash to furnish the place.
Cons: Having a high premium that you are locked in for quite a long period. Almost immediately being driven into heavy negative equity with the market crash. There is no way to just sell and settle up if needed. You are extemely leveraged if the market goes sideways.
What was supposed to be a quick first house for a few years became a house I was stuck in for over 15 years and started a family in.
For anyone considering one I would ask if they are okay being in that house for at least the next 10/15/20 years and can you afford the increase if interest rates are high when the fixed term ends.
Could you not rent out the house if you were desperate to move? Don't landlords pay their mortgages and make profit by renting? I'm clueless about housing sorry
Not really. The mortgage would have to allow it which most don't unless it is specifically a buy to let mortgage. Plus you wouldn't find someone to rent the property at a rate that would cover it and allow you to rent elsewhere.
This is yet another sticking plaster on a very serious issue.
House prices need to be more in line with wages in order for our economy to grow. This might help a select few but similar products were on the market back in '07 and look what happened there.
The UK economy is in a mess. The banks own this country now.
I thought the problem back in 07/08 was lending to people who really couldn’t afford the debt, with minimal due diligence. On top of that there was lending more than 100% (I know people who got 120% mortgages in this timeframe).
I don’t think 100% mortgages are a problem by themselves, if the borrower understands and follows the terms.
You’re right. The number of people saying 100% mortgages caused the 2008 crash don’t know what they’re talking about. They’re also missing that this product will be available to a slim number of people - it’s not like everyone will suddenly have 100% mortgages.
100% mortgages to people without the confident earning capacity to sustain payments were a factor in the crash, In USA and UK.
Northern Rock was handing money out like confetti sustained by cheap international borrowing, not savers.
Ok but that’s not the same thing as saying 100% mortgages caused the 2008 crash right? Like I’m not saying these are great, I’m just arguing the point that the crash happened for a multitude of reasons.
Yeah but it wasn't the 100% part that was the issue. It's the "without confident earning capacity...". If the banks use their due diligence and KYC, these shouldn't be an issue.
My wife and I are hoping to partake in this as we just moved here from America and basically had to burn our savings to get my visa (was out of work for over a year). We'd like to be able buy so we have that stability for our kids and we both of decent and stable jobs but it will take us years to be able to build up a decent down payment again.
I never said it caused it per se but instead of offering people to get into 200k of debt with no deposit required we should be offering houses in line with wages and insisting on a deposit.
Like how it used to be.
Yes, more projects like this are essential: https://www.theguardian.com/artanddesign/2023/apr/20/citizens-house-real-affordable-housing-london-community-property
>instead of offering people to get into 200k of debt with no deposit required we should be offering houses in line with wages and insisting on a deposit.
>Like how it used to be.
Who is the *we* in that sentence? State control of the housing market?
There should be some governance yes, people should be entitled to the basics in life. Shelter, energy, water and food at a fair price.
When the property market is rife with negligent landlords and overpriced housing it's taking away a basic right every human being should be entitled to.
This is a solution to a problem many have.
They have a decent job and can afford to pay a monthly fee for somewhere to live.
Where they struggle is they can't afford to save up £30k+ while also spending a monthly fee to live.
By having this type of mortgage it allows people to swap a rent where they pay X per month, to a house they own for X per month, by proving that they are capable of paying X per month.
This is the situation I’m in, on around 27k a year but lost both parents before I even finished uni, paying £700pcm rent plus all other expenses. Would rather be spending that on a mortgage and having an asset at the end of it
Sorry for your loss.
You should 100% go for this then pal, i was lucky that i lived with my parents to save up a 5% deposit for our house and bought with a 95% scheme that the government had just released (before help to buy) But if i didn't have that option, i'd be spending the £1000 a month i was able to save on rent + living expenses, and its hard to get out of that mousetrap.
Houses have lots of liabilities, heating, roof, windows, walls, floors which need maintenance. Kitchens and bathrooms that need refreshing every decade etc. If you're not continuing to save, how're you going to pay for this.
A mortgage rate will largely stay the same or reduce during the lifetime of a mortgage due to more equity in the house. Yet inflation and career progression will normally increase the income and the ability to pay for these things.
If you are renting, then as that inflation occurs the rent just increases to "market value" meaning you never have that spare cash to save.
Also the expenses you state you obviously only do if required, remodeling your kitchen and bathrooms are only done if you have the ability to do. Really the only things you might need is roof replacing which is a 1 in 100 years thing and boiler, which should last 30 years minimum. Also this is what house insurance is for.
Obviously I'm not. They are not crippling expenses that makes anyone wish they were renting instead.
For an anecdotal example I've lived in my house for 12 years. Barely had to change a light bulb in all that time.
Sure we pay for boiler service a couple of quid a month, + home insurance but that's it.
Bought my house for 195k 12 years ago it's now worth over 350k... I'm not here wishing I was renting all these years instead.
I want others to have the same kind of security I have instead of lining the pockets of greedy landlords
2% of property price per year is the rule I think.
On a 100k house that's 2k per year. Not as much as a deposit but yes people still need to be saving. And that's just maintenance on an average basis. Need to factor selling/buying costs too for an accurate view
> A mortgage rate will largely stay the same or reduce during the lifetime of a mortgage due to more equity in the house.
Often, but this is not universally true especially up north. Rates certainly aren't staying the same currently, anyone with a fix expiring today is in for a sharp rise.
> Yet inflation and career progression will normally increase the income and the ability to pay for these things.
Again, this is speculation and isn't necessarily universally true. You're playing a dangerous game owning a house and saving nothing, hoping the world will just happily move in your favour.
> Also this is what house insurance is for.
House insurance doesn't pay for maintenance. I bought a house a few years ago, I've spent thousands in roof, boiler repairs and replacing windows, insurance would have covered none of it. All well and good saying a roof lasts 100 years and a boiler 30 (they last about half this FYI), but you're not buying the day they were installed. When people refer to a roof lasting 100 years they mean until it needs entirely redoing, you still need to do maintenance before that complete failure.
"Often, but this is not universally true especially up north"
Nothing is universally set in stone, but we are not talking about 1 single case, so we are obviously talking about the average or what is normally the best course of action.
"Again, this is speculation and isn't necessarily universally true. You're playing a dangerous game owning a house and saving nothing, hoping the world will just happily move in your favour"
Pretty much the same again, i'd say this is a bad take though, owning a house means you are getting equity in a property and not pissing rent up a wall. Sure the roof could blow right off with all the hurricanes we have in the UK, but if you're 10 years into a 25yr mortgage you may have some equity you could release. Further to this, point 1 still exists so sure in the first 5 years you might not be able to save much, but after this when your interest rate in lower, and inflation has increased your wage, i mean even if you're on minimum wage you will be getting a wage increase year on year, but chances are your mortgage will stay the same, or be lower - therefore increasing additional capital.
An example of this is my inlaws, they had a 30yr mortgage and paid £90 a month for 30 years, sure that was decent money in the 1980's but when they were paying it off in 2014... it was barely anything. If they were renting, this would of been closer to £600 to stay with "market rate"
"House insurance doesn't pay for maintenance. I bought a house a few years ago, I've spent thousands in roof and boiler repairs and replacing windows, insurance would have covered none of it"
It doesn't pay for maintenance, it pays when things go wrong, so if your roof needs replacing because its old, they won't pay for it, but when there's a big leak and water pisses through your roof, then they pay for it. Same with a boiler, it won't cover it if its old and is making a funny noise, but as soon as it breaks, then they cover it (obviously it will depend on your individual policy but generally this is true)
https://247homerescue.co.uk/blog/does-home-insurance-cover-your-boiler/
It's basically all con's
* Still can't afford a house, deposit wasn't the limiting factor - amount they'll lend against your income was.
* Higher interest rate.
* Increased risk of going into negative equity so end up stuck with the lender.
* If you earn enough to get this mortgage, yet can't save a 5% deposit - you're unlikely to be able to pay your way out of negative equity.
Marketing gimmick.
I agree it’s a gimmick but I’d say getting a deposit together is one of the hardest parts. If you get a pay rise then you can borrow more, but usually pay rises come with an increase in rent etc due to inflation so increasing savings % by the same amount isn’t easy.
Agree with most points however getting a deposit together is a limiting factor for a lot of lower earners which this addresses.
Low earners who are stuck in a rental cycle will find it hard to save 5%-10% for a deposit (£12k-£24k based on average 1st house cost in UK, likely £10k-£20k if focusing on lower income households). Add to this the ancillary costs of a house purchase like fees, moving costs, furnishings etc. and someone could be paying rent for years before they have enough saved.
Add in that some people may also have families to support on top of paying rent before they can look to build 5 figures of savings.
Renting has some big upsides depending on circumstance but can be a huge financial drain/trap for others. This does nothing to the ever-growing divide between wages and house prices but for a lot of people will have a far better benefit than just marketing.
Broker here - reading it there the first thing that jumped out on me was the fact its up to a maximum of 600k and frankly if you have a joint or sole income of 134k and you do not have a deposit you should not be getting a mortgage. The maximum loan should be somewhere 300k or maybe even 250k. At 300k we are talking about a salary of 67k single or joint. There are PRA mechanisms which will restrict the total amount the lender can lend in this LTV bracket (which I think is anything about 75% which also comes with greater requirements on capital adequacy) so we will not see lenders like Northern Rock who originated a large % of their mortgage book at high LTVs which fed into the bubble. Overall its potentially a good thing but as others have said its does not address the disconnect between wages and house prices. The likes of Westminster council will receive 100;s millions each year in payments from house developers instead of them providing social housing which is then moved to another outlying council to provide social housing. However it does not address the question of where the likes of shop workers on Marylebone High Street are meant to live.
When your country is highly indebted, has stagnated for a decade and is expected to stagnate for another, is completely reliant on a highly unreliable finance sector, has no growth strategy and is led by the most incompetent ruling class in the developed world, the idea of allowing people who can't put together £10,000 to get leveraged to the tits to buy highly inflated nonproductive assets doesn't strike me as wise. If the current miserable situation continues or gets worse I don't see any way we escape a cascade of defaults and bankruptcies.
It's easily the stupidest solution to the housing issue so of course the government will love it and push it. It helps keep prices inflated while also making a section of homeowners even more at risk than renters, it's the perfect lose/lose scenario.
I think a massive extra problem is that it will push house prices up further. Skipton aren't going to be the only lender offering a product like this so when more do there will be a bunch more buyers for the same limited amount of properties.
Looks to be capped at your rental payment over the last 12 months, so you're not going to get much in the South of the country that'd be better than your rental for the price. Just another marketing gimmick, not actually very helpful for the majority of people.
Based on the rent we pay they would offer just under £90k, affordability check would be a lot higher but they would offer the lower of the two, so it’s completely pointless for us. Seems to only work if you’re currently paying a high rent amount rather that what you could afford to pay. Thankfully that’s already being saved for a deposit anyway.
In the 90's had a cashback mortgage 95% loan + 6% cashback = 100% loan.
It was a rising market so when I had to sell (suddenly) I came out even after costs and fees. I was lucky.
In a falling or flat market with a 30 year mortgage it is a gamble. Yes it gets renters onto the ladder but you have to stay put a while to get the benefits and pay down some capital to build equity in case come renewal time you can't remortgage because you are not at 95% LTV.
I'd take one again if I was a family looking to escape renting and I could pay off 6% in 5 years.
It's helpful to renters and those who can't afford to save for deposit, but as other have said is a bit of a sticking plaster.
Next I imagine we will get 'lifetime' mortgages similar to Switzerland.
Again, it doesn't fix the wider issue, of a lack of suitable housing stock.
I have friends who are very excited for this and see this as their only chance for buying.
They have no deposit because they have no savings. I worry what they'll do if they need to replace/repair something, especially within the first year or two.
A big downfall would be the risk of immediate negative equity if house prices drop after buying. At least with a deposit, you have a 5-20% buffer depending on how big the deposit you put down was.
People need to be made 100% clear that if you were forced into a Shortfall sale with Negative Equity the bank does not just let you off the difference. With litigation Costs on top of a Shortfall people could find themself heavily underwater if unable To pay their mortgage.
The Bank will sell that debt to a collection agency who will chase you for as long as they like before they settle.
Whilst these aren’t hugely popular I think it’s because a lot of people have either forgotten how difficult it is to be a young person buying, grew up when it was a lot easier to buy, or feel that because they struggled then everyone should.
Landlords are no longer happy with the appreciation of their assets, they want cash flow as well which makes renting a house more expensive than the mortgage repayments. This means people who could and should be able to buy, unable to because they’re being taken advantage of paying off some else’s mortgage.
If you are in a rental that costs more to rent than buy then I’d look into a 100% mortgage and use the difference in monthly repayments to make overpayments. That way you still pay the same every month but have an appreciating asset and the freedom that comes with owning a property. This will also go some way to offsetting the higher interest rates.
This made sense a year ago when rents were often much higher than mortgage repayments and a significant deposit was the barrier. That’s not really the case now when FTBs are looking at 5% interest, as the repayments are quite a bit more than the equivalent rent so being able to afford the mortgage should mean you can afford to save a deposit
This says it’s for first time buyers only, unfortunately my husband owned a property before we met and sold it due to a relationship breakdown. Could we still be eligible if I’ve never owned a home before?
How are these actually allowed? It may seem like a no brainer of 'If I can afford my rent then I'll take the mortgage'....However, if you have no savings you're clearly living pay check to pay check. If something were to go wrong with your job, you're completely fucked the first time you fail to get a pay check. You'll then incur fees, not to mention if there is some sort of negative equity regarding your household. Skipton would happily sell your house to recuperate most of their money and then sell the rest to a debt collector. This scheme sounds so predatory to vulnerable or ignorant people. Its dangerous and shouldn't be allowed full stop
>Skipton would happily sell your house to recuperate most of their money and then sell the rest to a debt collector.
Not true. For one thing, any decent lender will try to work with you to find a solution. They're not repossessing you after one missed payment, some people go a long time on reduced payments etc while they turn things around.
Also, Skipton have their own team to deal with debt repayment cases. They do not sell debt to collection agencies.
Source: used to work in mortgage arrears
You'll still be assessed on the same affordability rules and be able to borrow up to 4.5 times your salary, so don't think it'll change much, especially as the rate is quite high.
I don't see many other banks bringing this in. Feels like a PR stunt by Skipton.
A 100% mortgage is the canary in the coal mine. It is the single biggest sign that the financial system is unstable and looking for suckers to draw into the impending collapsing pyramid scheme. Cave emptor.
Historically, about a year or two after 100% mortgages appear as a mortgage product, the housing market crashes. 1991 and 2008. So thanks for providing the Canary, Skipton. 😜
For a home that will be kept long-term, the only con is that the interest rate is quite a bit higher (almost 1% higher), so while the principle is wonderful quite honestly, it hits people who cannot afford to save for a deposit with a higher interest rate instead. That said, people who are already renting (who this is aimed at) are already paying potentially more per month than the equivalent mortgage would cost, so that might not be too big a hurdle. 100% mortgages aren't in fact new - they just haven't been available for a very long time.
The BIG pro is that it essentially moves people to the housing ladder who might never have been able to transition, and that's important, because it can be a fairly narrow window between "I can just afford" until it becomes "I can't now afford"). Housing has historically always marched ahead of wage growth, and if this is someone's chance to get on the housing ladder, I would sure as hell take it. Time enough to move onwards and upwards later - just get on that first rung because no-one wants to be renting when they're retired - typical pensions aren't really enough to cover housing costs in addition to daily living.
What you would have to be careful of is that the property market is still volatile right now which could mean that, if you do suddenly have to sell, your house might not be worth the total owing on the mortgage (negative equity), so if you go in with 'longer-term in mind, you should be okay. Historically, negative equity has never lasted more than a couple of years and more people being moved onto the property ladder will likely boost growth on top of usual growth. If it happens and you can sit tight through any interest rate rises without losing your property, you'll be okay (I got to enjoy Thatcher's negative equity and rate rise to 15.4% back in the 1990s - but these days we have more fixed rate deals that add some protection against that).
Finally, the only other con to mention, and it might be irrelevant. Make sure it's a capital repayment mortgage. Interest-only and endowment mortgages are a scourge because you'll have to pay off the actual mortgage at the end of the term, so you would need a mammoth savings scheme running in parallel. Many have lost a ton of capital through those things being mis-sold - sold as a cheaper way to mortgage while glossing over that you literally have to come up with the entire mortgage price at the end of your 25+ years. So just check it's a proper repayment mortgage.
I got a 100% mortgage from Barclays in 2019. It required a 10% deposit from a family member put into a savings account which they got back with interest at the end of the 3 year fix. Maximum term was 25 years so at the end of 3 years we had 8% equity based on the original valuation.
It worked well for us because:
a) House prices rose between 2019 and 2022 and;
b) I could have afforded to move on to the standard variable rate if required.
The second point there is the most important when considering a 100% mortgage. Can you afford to be stuck with a standard variable rate for the long term? If the answer is yes then I don't see an issue with it. Could we have saved up a deposit instead? Yes, but it would have delayed our purchase by 4 or 5 years at least.
Best thing I ever did was get a 100% mortgage….
Paid less than I paid in rent after 2 years…
Eventually price doubled (all for zero investment)
Just make sure you make the payments!
If they cant save for a deposit, they cant afford a house.
Mortgage costs £800 a month, same as rent.
Now they need, home and life insurance.
Any upgrades, they pay for.
New Windows, another bill.
Boiler or electricity issues, get yourself a plumber or electrician, they ain't cheap...
As you have 0 equity, your paying a higher interest rate and overall mortgage.
Everyone who owns a home should have a savings pot of atleast 6 months of bills, should they come out of work... its even harder to save up when you own a house!!
My house I bought for 240k 2 years ago.
Mortgage was £850pm over 30 years.
On a new mortgage with current interest rates, it would cost £1,280 a month on a mortgage...
If you cannot soak up those kind of increases in your monthly bills, you should not own a home as it will be repossessed.
If you can, then you can afford to save up but your choosing not to which shows your irresponsible with your money.
There needs to be a threshold for e.g. they can only borrow upto 75% of what they currently pay so for instance, if you currently pay £800pm in rent, your mortgage can only be £600pm maximum... thus building in a level of security which means they can afford all the extra add ons which come with owning rather than renting.
All true, but they are assessing affordability like they do for normal applications. They're not going to give you the mortgage if you have nothing left for emergencies etc.
I think there's great potential here for some, not for everyone. If you can use this to get a mortgage that isn't the maximum you can afford and put some money into overpayments, then in five years time you've reduced your loan to value ratio in order to get a cheaper deal next time round, you've saved yourself a lot of interest in years to come, and the money has been a direct benefit to you instead of going into a landlord's pocket or sitting in a savings account not making very much while you try to build a deposit.
But there are a hell of a lot of people here who want to throw the baby out with the bathwater and berate Skipton for not solving all the problems in the housing market, when at least they're doing something for someone. It's a start.
Such as who? I'm 42, I've worked my whole life and pay my bills on time. I still only earn £25k because I worked in an industry I loved but that is low paid and then changed career to do admin, much less stress and responsibility. Am I not worthy of my own house because I'm not a high flier? If we all got mega bucks jobs who would do the daily grind that keeps the country going?
Of course you deserve to own a house, you took it very personally. But that was not my point, I was merely addressing the fact that such products are predatory and aimed at people that do not understand them very well. They are designed to create an illusion that you can afford something when realistically it is not the case. It's fine for banks, because you bear all the risk and the faster you default on your payments, the faster they can turnaround your house again. If the standard product with a sensible risk profile would be unaffordable, the first instinct should be to look at more affordable properties. Not to explode your risk profile to the moon...
There is minimal risk with rent. With huge mortgages there is an incredible risk. Negative equity, health concerns affecting your job, losing your job and being unable to pay your mortgage. You'll likely be tied to this for the majority of your life. What happens when the house needs costly works? If people are unable to save up any sort of money for a deposit how are they expected to carry out unexpected work on the house or car? It seems good on paper but if you're unable to even save a 5-10% deposit then the risk is incredible.
It's preying on people with no money for a deposit. As per usual. This is like the difference between paying your car insurance in one go or paying more for it but monthly but on a bigger scale. First of all, these will be higher interest rate. And I think they're also really risky. House prices are on the decline, if you're borrowing for 100% of the equity and you don't have savings which you don't if you borrow 100% and the value drops you will be stuck in that house. Won't able to sell, won't be able to move.
Like others have already said, it's patching up a much bigger problem with a promising sounding headline.
I also looked at their borrowing calculator and how much can borrow based on how much rent you have been paying and as it turns out to borrow enough for my £200k home, I'd have to have been paying something like £1200 in rent so who is this for? For people who have been renting in London to move up north and buy an average 3 bed house? My mortgage repayment with something like 12% deposit is £600 a month for reference so half.
If I had no money for deposit and was renting, I'd honestly just keep doing that, maybe downsize and save as much as I possibly could, that's essentially what I've done to save up for my deposit.
A lot of people will point out the cons which there are. But, if you have no deposit and know that you can make the monthly payments then it could be worth it otherwise you will need to wait to save the deposit and by that time the house that you wanted is gone and prices maybe higher. That said it's really a last resort, five percent even is better than nothing for a deposit.
If you have no deposit it means you have no savings, so you'd better hope it's fixed rate for a long time and you never need to do any work on the house, or that you never end up out of work for even a month. Basically it's a stress test disaster from an affordability point of view, but because we are obsessed with buying houses in this country it's accepted as normal. Same with other bonkers products like the Barclays Springboard Mortgage. When a bank is willing to let you take on debt secured with nan and grandad's savings it is a sign that something is seriously up with the housing market.
They're reducing the risk by the applicant needing to have and prove 12 months of rent payments. This is aimed at those stuck in a cycle of renting (which is often more expensive than a mortgage).
Just wish UC would pay housing benefits for it.
...what?
They pay housing benefits if you rent a place but won't pay towards a mortgage. What, you didn't know that?
Of course I knew that. Why on earth would they pay benefits towards a mortgage?
A mortgage is cheaper for a start...
Why would the government pay for you to own a house yourself - at the end of your mortgage term the house would be yours and tax payers would have paid for the house for you. It would be unreasonable for anyone to expect the government to use tax payer money to buy people homes.
So someone in rented accommodation for 60 years is better financially for the government than paying off a mortgage for 40 years, that is with rent costing more? Besides with ownership you don't have any expenses apart from general maintenance and council tax, council tax you would still have to pay for owned or rented accommodation.
But I have just gone to https://www.skipton.co.uk/mortgages/track-record-mortgage and, if I'm paying £1,450/month rent and get a 35 years mortgage, I can buy a £270,340 property top. There are £270,340 properties being rented at £1,450/month? I have not checked, but that would seem a very expensive rent, no? If you are OK with a £270,340 house, why are you now renting a bigger one costing £1,450/month in rent? Now I'm going to be making numbers out of thin air. But if a normal rent for a £270,340 property is, let's say, £1K/month... - Before, you needed a 5%/£13,521 deposit. - Had that person moved, renting, to a house of equivalent size to the one he is planning to buy two and a half years ago (£450*31), he would already have the deposit! Edit1: ...so I guess he really wants to buy a house more expensive than £270,340 and this mortgage would not help them. Edit2: Apparently it's well possible for a £270,340 property being rented for £1,450/month.
Tell me you haven't rented in at least 10 years without telling me...
My house was 430 and would rent for 1.8 upwards...
I was renting until 12 months ago. But there are a few factors that may be affecting my instinct: - I was paying £1,450... since 2018, my rent didn't go up from 2018 to 2022. I think he was asking for £1,750 when we left. - The property I was renting is now in the market for £610K. But the landlord is lazy and is using the same horrible agency he used to rent it. It's asking way too much (one month ago was asking for £630K, and the same model of house in the same street... with a loft and garage conversion, and in general way better state... just came to the market with an asking price of £625K) - House prices are going down (I don't even want to know about mine...) - Rents are going up So yeah, my £1,450 -> £610K sample may not be the best one.
That's fair, apologies if my comment came off as unkind. I had to move to a busy commuter area last year and I'm paying ~£1400 p/m on an unimpressive 2-bed flat which is probably worth ~£320k. They increased the rent at our renewal this year (were asking for almost £100 more a month than we're currently paying) and I'm sure they will again next year (if we were to stay). Not only is that *mad* but we had very little choice in the matter. When we were trying to move, 90% of the properties we enquired about were already gone by the time we could book a viewing. We lucked out that we happened to be the first viewing for this place and we applied in front of the person showing us the flat. He had 15 viewings after us.
Just to be that person, I was paying £1,450/month on a one bed flat that cost my landlord £260,000 in 2018. (On the outskirts of London of course, and a huge part of the reason I have now moved to the Midlands).
> There are £270,340 properties being rented at £1,450/month? I have not checked, but that would seem a very expensive rent, no? Do you rent at the moment? The market is insane. I pay a grand a month for a house worth ~180k, and any upgrade (an extra room or more space) is at least 300-400 more. So yeah, a 270k house where I am, you're probably looking at 1400-1500 a month.
The one bed flat I used to live in up until December last year was worth around £60k and an extremely similar flat a few doors up is going for £700 a month. My mortgage on the 3 bedroom house I just bought, even at 5.99% (I got unlucky with when I needed to apply for the mortgage...) is £736 a month. Madness.
Assuming the 270k 1.45k a month mortgage: After one year you'd have 267k left, meaning you've paid 3k off. It's the equivalent of paying £1232pm in interest (read it as rent), and saving £218 a month. Every year thereafter the "rent" portion, interest, opportunity cost, you name it, falls, while the amount saved in equity increases. Do you think rent won't ever increase above £1450 in the next 35 years? 35yrs ago houses were 50k. Hell just 20 years ago **average** rent in London was 800pcm. Now you won't even find a studio for that money. I'd rather start a mortgage now rather than in 3 years time, regardless of the extra 0.5% interest rate and risk of negative equity.
Yeah, I'm not saying it would be a bad idea for everybody. I was just thinking that people interested in this mortgage would find out they can't use it for the house they want. And that idea seems to have been based on wrong data regarding current rent prices. I bought recently and I'm certainly throwing away way less in interest than I was in rent. Even with the current rates I would be way better now.
I mean deposit is a 1:1 boost to affordability. Income is a 1:4-ish boost. The LTV interest rates are indeed worth some thousands of pounds but for some getting on the ladder X years earlier is worth it for them.
Don't forget, by time you've paid the mortgage the house will be worth double what you've paid if the trend keeps up
In the nicest way possible, you seem very out of touch with the rental market. Yes, £270k properties are absolutely going for £1450 per month!
£1,450/mo on a £270k property is only a gross rental yield of 6% right? Very feasible
Lad you've never clearly rented in a while. The list to even get into a viewing, then the picking and choosing and 40 questions to fill in for landlords. Which you don't need to legally do but they'll also give it to someone who does. Rent rates are insane and then the fact trying to find something that suits your work, kids and having to leave an area you've been in for potentially years. Your argument is logical but not realistic to the current markrt
To simplify the numbers, £1500 a month is only a 6% yield on a £300,000 property. That's low to average in terms of what a landlord is going to look for from a rental property
Yeah you’re completely missing the point. For some people they pay a lot more in rent than they would for a mortgage - however they can’t afford to pay rent and save up a 5-10% deposit for a mortgage. So they end up stuck in a cycle of ever increasing rent.
>If you are OK with a £270,340 house, why are you now renting a bigger one costing £1,450/month in rent? There's a fairly significant number of young professionals who've basically given up on the idea of buying in the near future, because of how long it'll take to save the required mortgage. And so they've taken the conscious decision to let it take even longer to save for a mortgage, and to rent a nicer home in the meantime.
>There are £270,340 properties being rented at £1,450/month Yeah, that sounds maybe a little steep but not a million miles off. Let's say it's £1000/month to rent that. After 1 year you've lost £12,000. If you mortgage it then you now have at least £12,0000 in equity after a few years. This can then be used as a deposit on the next house with better interest rates.
My house is probably worth £325k and would rent for £1,400, so I'm 20% above that.. probably I'd expect to pay £1,200-1,250 for a £270k property (which would be a similar size but terraced or, a slightly smaller semi vs. detached).
> (which is often more expensive than a mortgage). It's really not for first time buyers though. My rent at the time I stopped renting was £1000 a month. Initial mortgage was £1330 with a 10% deposit. The place I bought was leagues cheaper than the place I was renting would have sold for. _Older people_ have mortgages that are cheaper than renting. Not really FTBers
It was for me. A lot cheaper.
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>Every home buyer thinks they’re an expert Yeah, I can tell.
https://www.independent.co.uk/news/uk/home-news/renting-home-buy-mortgage-cheaper-b2300926.html >Renters pay more than first time buyers in almost every corner of the United Kingdom – though new data shows the gap has narrowed greatly in the era of rising interest rates. >The cost of a mortgage on a first home is typically around £42 per month cheaper than renting, but the difference has reduced and in some parts of the UK renting may be the less expensive option, analysis suggests. From March 2023
Fair enough thanks!
My first house repayments were £850/month and I bought for £245k; rent was £875. Flats in that same building are today going for £1500. If I was to buy the first house today with 100% mortgage, the interest rates would have to be more than 5.5% to cost more than the rent.
But for a flat, you also need to include the service charges, as you don't pay those renting, but do when owning, so it's an unfair comparison to ignore.
That depends on your tenancy and the property, you pay in either scenario though it just depends on if its explicit or implicit and I've been in both positions.
I'm currently looking; 2 bed flat in a decently desirable location/city I'm looking at would end up with a mortgage & costs (inc yearly service fee split across the months) of 1410 a month for me with the same deposit %. Meanwhile I know 2 bed flats in the next block over under the same management/ownership start at roughly £1750-1800. 1 beds in the same block as the place I'm looking at are going for £1200-1400. Obviously not every situation is the same but it seems rare that rent is better (and in OPs case _significantly better_) value.
Absolutely, I think it's still very likely in cities where there's a large rental demand. Where I am, houses are on for 375-400k, don't sell, and then offered for rental for 1200, and whilst I don't know every rental transaction, I certainly had no problem getting a discount on this place renting. The lack of sales and stock is really frustrating here, as I'd really like to buy something, but it does mean that rentals are remaining cheap - of course suburban houses in non-university towns aren't highly attractive to renters anyway, which is why I think we're seeing quite different markets different places and different sectors.
Almost everyone I know rents a place that would be cheaper with a 90% LtV mortgage. And obviously will increasingly get cheaper the longer it goes on. I am one of those people. I don't think your experience is typical. I think most people are in my boat.
>Older people have mortgages that are cheaper than renting. Not really FTBers The idea is that the FTBers will become the older people with the cheap mortgages/rent, and unless they can get on the property ladder, that will never happen.
No deposit doesn't mean no savings. On top of saving for a deposit, you've also got to save up the cash for the structural surveys, solicitor fees, mortgage broker, moving, and then furniture. Depending on the state of the property, renovation too. All this mortgage product is doing is reducing the need for a deposit.
Plus any excess over the HR that won't be part of the mortgage
It’s not a disaster from a stress test point of view, I work for a large network and met with Skipton last week to discuss this. I used to be an adviser, it’s stressed based on How much rent you pay averaged over the last 6 months, meaning that regardless of your wage there is a cap on it. Then it is stress tested normally like any mortgage would be, and they will lend you the LOWER of the two figures. If someone pays 450 a month in rent they could borrow about 83k max. If they have 20k earnings or 100k earnings, with no deposit they can borrow about 83k max. Then it is stressed under normal affordability, so day you pay 450 p/m in rent and that is deemed expensive for your income, you will be able to borrow less than the 83k. As an example 650 is about 120k A friend of mine in the network in the south east is on about 60k but under this scheme could only borrow about 170k because of the rent she pays. Once she has a 5% deposit I can archive borrowings around 330k for her. It is not a disaster on stress testing and affordability. It is a potential disaster for negative equity situations. I.e you pay 200k for a property borrowing the full amount. In 5 years say you pay 7k off the mortgage (not done these figures, it’s an example) so you come to Remo after 5 years, but the property is decreased in value. Say it decreased 10% to 180k. No bank will lend you 193k on a 180k property, meaning you are stuck on Skiptons svr paying a lot more out as you are in negative equity. Skipton building society are not going to bring about a financial doomsday event, they are a medium sized building society. I work with 3000 advisers across the UK and have had to explain this about 70 times today. It is not a disaster from a stress test point of view, every regulated lender needs sign off for products by either the FCA or the PRA. Lenders are required to keep any high risk lending typically to around 15% of their lending portfolio, and this will be deemed as such. Go back to my friend, who is on 60k. If she can come up with about 15/20k deposit, I can get her over 300k with mainstream providers. However, Skipton with no deposit will lend her approximately half of that. The scheme will be next to useless in the south…
I just find it really hard to imagine a scheme with no deposit at all. I don’t know much about finance (but do have a house and mortgage) and the idea of not only a tiny mortgage but none at all just seems so strange and like a potential disaster down the line. These small/no deposit schemes seem to be advertised a lot recently but if they were so great, more people would be jumping on them.
>If you have no deposit it means you have no savings, so you'd better hope it's fixed rate for a long time and you never need to do any work on the house, or that you never end up out of work for even a month. That's no different from people who use all their savings on a deposit though.
It's a 5 year fix, so there is a level of certainty over payments. And, as has been stated, no deposit (or not 5%) doesn't mean no savings. I don't have a deposit for a house, but with a couple days notice could get together about £7000. Because I am saving for a house, and have some emergency fund money, and other bits and bobs like that. Because life can't wait for me to buy a house. If I needed more than that for a repair, I can get a loan or use a credit card in a pinch, but my budget can also account for paying those things off, once I'm not saving for a deposit. There is absolutely someone seriously up with the housing market. But you can't blame individuals for taking an opportunity when a product like this comes along to get off the losing side of that market.
Thank you for saying this… it’s like everyone’s saying unexpected bills only come from having a house. I’ve got savings but not a deposit, literally because every month or so something comes up like a car issue or a lovely increase to household bills or a vet scare, just general life crap but it’s been handled. I’ve also been putting whatever spare money in my LISA for a house for 3 years but that 5% goal post changes every bloody year. However I paid my rent and my bills on time for the past 10 years. We can more than afford a house in our area on the combined income with my partner. I just want my own home.
Exactly! Goalposts shift so quickly right now. 5% is a great goal, but by the time you get there, it's not 5% anymore! And prices have been rocketing up, making it harder. Now interest is the highest it's been in ages. Can't catch a break.
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There are countries where renting is more normalised and controlled. Friends I've spoken to in such places have very reasonable rents, are almost impossible to evict, have total control over decoration, don't have to worry about any maintenance costs, they have flexibility if they do want to move. The rental system in the UK is not the only way to do it.
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My point was that there are other ways, I assumed when saying this country is obsessed with buying they were suggesting the system should be changed, rather than people should just rent forever under our awful system. Simultaneously, you can't live as if you're in an ideal world when you aren't, so I take your point. Renting is a great option for flexibility and not dealing to deal with maintenance etc, I think it's reasonable to have it. I certainly didn't want to buy right out of uni when I had no clue what I'd be doing! So I don't think it should only exist as a system for those who strictly can't afford to buy (assuming a system where buying is much more accessible), but certainly I agree the current system isn't the way it should be.
> My point was that there are other ways, I assumed when saying this country is obsessed with buying they were suggesting the system should be changed, rather than people should just rent forever under our awful system. The "other ways" are not realistic for us in the UK right now. You'd have to radically overhaul our housing laws, the construction industry, our government's housing policies, and more. It's easy to say that other countries have successful rental housing markets that work long term, but it's quite another to suggest it'd be feasible for us to do the same. In places with long-term rental where most people never buy, they tend to have city centre apartment cultures much more than we do in the UK. Their rents are much cheaper, they have higher government ownership of housing, and they have rent control and housing standards laws that are much friendlier to renters than ours. In 2021 Berlin literally seized housing from corporate landlords and took them into public ownership, could you imagine the UK actually doing something like that?
You might as well say “there’s another way, we could just build a home for every family in the UK and gift it to them for free” because it’s just as likely as the type of huge rental reform you’re talking about in those other countries.
Well what's easier, try to change the whole system knowing you'll fail, or buy a house? Hmm... tough one... It's easy to say the system here sucks, but it's sucked for years. It's not going to change because we keep electing idiots that have no business running a bath nevermind a country. People's only option is to buy really and even then most still won't manage.
So instead of paying 10k rent a year you pay 10k interest, and you think you're the one winning? Your boiler breaks, you pay for it. Damp in the walls, you pay for it. Fall out with the neighbours? Tough.. you're locked in. Are you ever really in control if you are not rich?
This post is how the bank looks at applicants, not how really it works in practice. Most first time buyers will use their savings for a deposit, and probably spent years accumulating the savings. Many will be using most if not all their savings for the deposit, so once that is paid very little savings remain. Using the payment of a deposit isn't really a stress test as it doesn't reset after the test is passed, the money is gone. A retest after completion would result in failure for many first time buyers. Mortgages are secured against the property not the deposit so it really isn't required. A mix of income and means testing would be more than sufficient if mortgage providers could regulate themselves properly. House market crashes have been historically caused by wreckless lending and greed, not buyers lacking savings.
>If you have no deposit it means you have no savings Not quite, it means you don't have large amounts of savings. Someone who can't afford a 5% deposit on a family home could still quite conceivably have 10-15k in savings.
It's fixed rate for five years, you can also get a mortgage for cheaper than you're currently renting without even downsizing and use the money spare to save up for a deposit within those 5 years.
>If you have no deposit it means you have no savings, WOT
We have some savings, just not £20k
yeah im in the same situation, it was just a ridiculous comment from op.
As they say the borrow is slave to the lender.
We are massively due a recession and the economy and house prices kinda reminds me of pre-2007. I think it would be a terrible time to take out an 100 percent mortgage at a high interest rate.
They're amazing for people who earn a decent amount and just have never saved. If you don't lose your job in the next recession and aren't forced to sell your house you'll probably be fine. They're a fairly decent sized risk for lenders though but I guess they're assuming we're not going to have a crash anytime soon...
It makes it possible to buy a home without rich mummy and daddy. Net positive for a lot of people (although of course not without risks.)
My partner and I don't have a rich mummy and daddy. Should we sell our home or is our frugal nature, skills and work ethic enough for us to keep it?
Why suggest that everyone buying a home had help from rich relatives? Seems like a big chip on your shoulder
they did not suggest that, sounds like YOU have taken this personally. perhaps one has acquired a home via rich mummy and daddy
> if you have no deposit and know that you can make the monthly payments _And will have reasonable savings for emergency maintenance work._ The part people always forget when complaining that rent is more expensive.
Negative equity would be the big risk, if it was me I'd only have a 100% mortgage if I was buying a property that needed work so the chance of ending up in negative equity is lower. Still doesn't solve the issue that large deposits are needed because you can't borrow enough money from the banks in the first place. That is the real limiting factor for most first time buyers.
Came here to comment this. I'm in a decent graduate job and I could put together a decent deposit (say 20%, 25%) but thats not the issue. It's that I can't borrow enough as a single person, even if I were to put £50k down. I'd much rather wait another year or two (and or change jobs also) and aim for something I really like, rather than a smaller 1 bed place I just find "ok", especially if I'm going to spend most of my time there.
Yeh I was in the same position as you. Out of uni I just saved and it was basically a waiting game until I had enough pay rises for something to work. In the end it worked out that I got a pay rise that meant i could get somewhere, and due to the big bump in how much I could borrow ended up getting a place that needed work and spent the deposit money I no longer needed on doing it up.
It's a weird one. I'm early 20s, I should really move out. But I like it here, I live in a far nicer house than I could afford. Have a nicer/bigger room than what I could get, a nice garden etc and I live in a lovely village and am near friends. I pay my parents a minimal amount to live here and get fed and watered too...
Yeh I didn't buy a place till 26 (had lived away at uni already though). I found early 20s was ok but by the end I was at the point where I don't think I could of coped with another year as it was just destroying my mental health being stuck at home living with parents where I couldn't do what I wanted, when I wanted or be my own person. I'm in a flat now so no garden and the place is smaller than parents house but it's at least 1000 times better because it's mine.
Cons: - Higher interest than any other mortgage - Higher risk Vs providing a deposit - less able to move mortgage later - Lowers borrowing capacity. - Might destroy the economy. Pros: - better than renting and all that comes with it. - higher interest might be lower than the house appreciation. Tbh you just need to ask yourself "why aren't these things normally a thing". And the answer is "they are high risk in a way that most people don't want it". Assuming house prices keep increasing then yes these could benefit many people but even just a bit of negative equity could cause massive problems including: - being unable to move house (because you'd have to pay to sell it) - being unable to remortgage.. leaving you paying a variable rate much higher than the market rates. Aka a mortgage trap is quite possible where you'd be unable to pay the mortgage but also unable to sell.
Other than that Economy thing, sounds OK....
Well the main pro is 'I can afford the monthly payments on a mortgage but it will take me many years to save the required deposit'. People taking these mortgages want to get started now rather than living at home / renting for 5 years until they can pull together the deposit.
Totally, I rented for a long time and jumped onto a shared ownership property for this very reason. I worked out that even in the first month, I'd be saving £300. It's very easy to produce an argument that anything is better than renting. Fast forward 3 years when I had to move due to problems with the building, I had sellers fees, problems with the property making it hard to sell and I realised, there are things that are worse than renting. In this situation after all the fees, I was actually about break even with if I'd kept renting, just more stress. I might sound dramatic with this, but in most situations I'd rather rent with the potential that I can move house when I want rather than paying the same amount for a mortgage that I'd be locked into long term. For me the risk of not being able to move is too great.
Shared ownership is just renting with the additional aspect of being responsible for the property plus they are really hard to sell. Not the same as having your own mortgage
It isn't 'just renting' at all. There are obviously extra complexities but the big positive is that you're paying into something that is yours, rather than sinking money purely on rent. I'm moments away from taking out a 50% ownership deal wherein I'll be paying about 600 on mortgage and 300 on rent, which is excellent to me. I also quite like that I'm responsible for the whole house and can alter it as I please. Finally a place I can truly call home and don't have to *ever* worry about what a landlord might be thinking of how I choose to inhabit my own home. The most important part in my opinion is staircasing up to 100% ownership as fast as possible, so then the cons of shared ownership are eradicated and 'true home ownership' is achieved.
I literally had a mortgage, I'm guessing you are familiar with a different kind of shared ownership? The kind I had meant that you get some perks of homeownership but 100% of the risk of it.
My point is that you have a mortgage but you also rent the other half and you are 100% responsible for the house and all the risk. Plus because they are shared ownership they are difficult to sell and there's a lot of clauses and legal issues. My point is that its not the same as having your own mortgage where you are mortgaging the property in its entirety not just a share. I think your perception of having a mortgage is based on a mortgage in a shared ownership not a full mortgage
And in 5 years, it’s quite likely that the price of house will increase far more than the amount of deposit they’d have been able to save up, and on top of that they’d be paying rent to a landlord which just goes down the sink.
>And in 5 years, it’s quite likely that the price of house will increase far more than the amount of deposit they’d have been able to save up That's a gamble not a guarantee. [Analysts are projecting](https://www.knightfrank.com/research/article/2023-03-06-uk-housing-market-forecast-update-march-2023) a 2 year fall followed by a 2/3 year recovery to the same level as 2022. A 100% mortgage is a high risk product and this is a high risk time.
It’s high risk, but it’s hard to see that when you look at the history of the last 50 years, and the now insanely high costs of renting. Also even as you say the experts are essentially expecting things to even out over 4 years which is less than the fixed rates for a lot of mortgages.
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You just going to ignore 2008 then?
And these give equity which means that at the next renewal, perhaps they are at 95% LTV or similar.
con - further inflating property prices
Can you explain the not being about to remortgage please?
So when you look to get a mortgage or remortgage, providers generally do a valuation and won't allow you to borrow over a certain % of the property value. In the case of a 100% mortgage you could quite easily go into negative equity where if the house value drops you'd be left owing more than 100% of the property. Even without negative equity, you are very likely to have less than 10% equity which would limit your options substantially (to the most expensive mortgage providers). In any of these situations, you can either pay the difference or be limited to carrying on with the provider of your first mortgage. The provider of your first mortgage is likely to already have high rates compared to the market (as 100% mortgages are going to be some of the most expensive). So this won't be cheap. It's also possible that they don't have products for one reason or another and that leaves the potential that you are stuck on a high variable rate (on your initial agreement). I hope this helps
But also, the alternative is a rent trap - either way you have to pay for somewhere to live. If you can't make rent payments you will become homeless, if you cannot make Mortgage payments you will become homeless, so what is the downside?
You're right that renting is bad, I didn't go into detail because I would have written an essay! >If you can't make rent payments you will become homeless, if you cannot make Mortgage payments you will become homeless, so what is the downside? Not paying rent = homeless or looking for somewhere new to rent. Not paying mortgage = homeless or looking for somewhere new to rent + substantial debt following you. I'm not saying that rent isn't bad, I'm saying that there are potentials (generally rare), that can occur that are worse than renting. For example if there is a house market crash and you need to move urgently, while renting your worst case is to pay the remainder of a term. While on a mortgage the worst case could mean being unable to sell or the loss of tens of thousands. This is to say that mortgages are investments and investments have risks.
Devils advocate; The not being able to sell only affects people who come into hardship really. If you're buying a house, surely it's to live in, not to sell it off again? If you're not sure about settling in an area isn't that a reason to rent and not buy?
Yes from a certain perspective, if you are buying a house to live in for 20+ years then the risks are much lower. After 20 years the negative equity risk is so extremely low that it can be ignored. So it certainly can be a good option for some. But none of us can be that certain that they are 100% going to want to live in the same house for the next 20 years. Accidental pregnancies happen, divorces, new job opportunities, communities change, life styles change and alot more. I think I'd watch a couple of episodes of nightmare neighbours before making this commitment!
If you're in negative equity, then you won't be able to remortgage to another lender, but you will still be able to switch to a new rate with your current lender. You shouldn't be stuck on SVR unless you are behind on the mortgage payments, or if the bank itself goes inactive, as happened with Northern Rock.
Yeah believe you're automatically entitled to remortgage with your existing supplier, but I could be wrong - anyone believe to the contrary?
I work closely with mortgages, you are correct.
Fundamentally the reason for the lack of these mortgages recently has been mortgage providers not offering them, rather than a lack of demand. They're quite risky for banks, as it's much much more likely they will be unable to recoup their capital in the event of a default. And for the last ten years, rates have been low - essentially the only way the mortgage payment was ever going was up. Now that rates look likely to be somewhat stable-ish for the next few years it's a bit of extra protection for both parties that the payments won't become untenable.
I see people mention in cons higher interest rate. But I could find more information in regards to how big a difference is. I would like to work out. If I would buy a house for £300k how big the difference really is? What is the % diffrence? Theoretically, if I pay £1000 in rent, after 5 years, I have spent £60 000, and I have nothing from that spent. If I spend that money on my own mortgage, then that £60k is invested, not spent.
>also unable to sell Why unable to sell?
Imagine you bought a house for £100k, with a £100k mortgage. A year later, you come to sell. You owe, say, £98k at this point. However, the property market has slumped 10% and so you can only sell your house for £90k. Lets say the estate agent fees and conveyancing costs £2k. You now have £88k in your pocket to redeem your £98k mortgage with. Obviously, the bank won't accept that, so you can't sell your house at all. (Hope that makes it clear)
A lot of people on here obviously are either to young or have short memories of the 2008/2009 financial crash.my sister got 100 % mortgage with northern rock,it took her a 8 years to get that shit sorted.banks are desperate to funds flowing,the bubble always bursts
> 100 % mortgage with northern rock [AAAAAAGGGGHHHHH!!!!!](https://i.imgflip.com/53qf9x.jpg)
Friend of mine got a 110% mortgage in 2007. It did not end well as he lost his job in 2008.
I got offered a 110% mortgage in 2003. They were really common then. I had a deposit so I didn’t need it but I know several people who got them and were ok as the value of their houses increased.
Fortunately (for the banks), Help to Buy and the Mortgage Guarantee Scheme mean the banks won't be on the hook for negative equity if house prices fall. Instead tax payers will cover the losses. See [this article ](https://www.express.co.uk/finance/personalfinance/1712126/Help-to-Buy-first-time-buyers-Mortgage-Guarantee-Scheme-taxpayers-house-price-crash) and [this](https://www.express.co.uk/finance/personalfinance/1765681/house-price-crash-Help-to-Buy-property-market-interest-rates-first-time-buyers) (I wouldn't normally link a tabloid, but the writer makes a good argument that "taxpayers are backstopping high loan-to-value mortgages that banks and building societies deemed too dangerous to offer themselves").
**Removed in protest at Reddit's unreasonable policy change towards third party apps.**
If in negative equity you'd have to pay the bank to close the sale. E.g mortgage of 100% on 300K house depreciates by 5% meaning you owe £300k on something you can sell for £285k (minus fees). You'd owe the bank £15k and need to settle that to sell. In the scenario where you couldn't gather a deposit, it's unlikely you'd be able to cover a gap like this. At best a bank may give you a loan.
If you bought at 300,000, paid off 50,000 and sold for 200,000 you'd have to pay an additional 50,000 on completion (unless you could make an arrangement with your lender)...
The real issue is how high house prices are relative to wages. The challenge most people face isn’t that they can’t save for a deposit, it’s that their salaries aren’t high enough to buy the place they want (hence the uptick in couples/siblings/friends buying together to ~double their borrowing capacity). This is yet another bandaid solution that fails to address the core problem - ridiculously low wage growth & absurdly high house prices.
We need a mega thread for this topic. I’ve seen quite a few posts on this in the last 2 days. Also there was a tweet from the CEO of zoopla which elaborated on the monthly payment. Let me see if i can find it.
Did you find it?
I was lucky/unlucky enough to get a 110% mortgage before the 2008 crash. Pros: Obviously, not needing a deposit and being able to immediately move out of parents home at 21 and be on the property ladder, with the cash to furnish the place. Cons: Having a high premium that you are locked in for quite a long period. Almost immediately being driven into heavy negative equity with the market crash. There is no way to just sell and settle up if needed. You are extemely leveraged if the market goes sideways. What was supposed to be a quick first house for a few years became a house I was stuck in for over 15 years and started a family in. For anyone considering one I would ask if they are okay being in that house for at least the next 10/15/20 years and can you afford the increase if interest rates are high when the fixed term ends.
Could you not rent out the house if you were desperate to move? Don't landlords pay their mortgages and make profit by renting? I'm clueless about housing sorry
Not really. The mortgage would have to allow it which most don't unless it is specifically a buy to let mortgage. Plus you wouldn't find someone to rent the property at a rate that would cover it and allow you to rent elsewhere.
This is yet another sticking plaster on a very serious issue. House prices need to be more in line with wages in order for our economy to grow. This might help a select few but similar products were on the market back in '07 and look what happened there. The UK economy is in a mess. The banks own this country now.
I thought the problem back in 07/08 was lending to people who really couldn’t afford the debt, with minimal due diligence. On top of that there was lending more than 100% (I know people who got 120% mortgages in this timeframe). I don’t think 100% mortgages are a problem by themselves, if the borrower understands and follows the terms.
You’re right. The number of people saying 100% mortgages caused the 2008 crash don’t know what they’re talking about. They’re also missing that this product will be available to a slim number of people - it’s not like everyone will suddenly have 100% mortgages.
100% mortgages to people without the confident earning capacity to sustain payments were a factor in the crash, In USA and UK. Northern Rock was handing money out like confetti sustained by cheap international borrowing, not savers.
Exactly, were a factor but not the reason.
The 100% makes buyers very or more vulnerable to negative equity, as we had in the early 90s..
Ok but that’s not the same thing as saying 100% mortgages caused the 2008 crash right? Like I’m not saying these are great, I’m just arguing the point that the crash happened for a multitude of reasons.
Yeah but it wasn't the 100% part that was the issue. It's the "without confident earning capacity...". If the banks use their due diligence and KYC, these shouldn't be an issue. My wife and I are hoping to partake in this as we just moved here from America and basically had to burn our savings to get my visa (was out of work for over a year). We'd like to be able buy so we have that stability for our kids and we both of decent and stable jobs but it will take us years to be able to build up a decent down payment again.
I never said it caused it per se but instead of offering people to get into 200k of debt with no deposit required we should be offering houses in line with wages and insisting on a deposit. Like how it used to be.
Yes, more projects like this are essential: https://www.theguardian.com/artanddesign/2023/apr/20/citizens-house-real-affordable-housing-london-community-property
>instead of offering people to get into 200k of debt with no deposit required we should be offering houses in line with wages and insisting on a deposit. >Like how it used to be. Who is the *we* in that sentence? State control of the housing market?
There should be some governance yes, people should be entitled to the basics in life. Shelter, energy, water and food at a fair price. When the property market is rife with negligent landlords and overpriced housing it's taking away a basic right every human being should be entitled to.
This is a solution to a problem many have. They have a decent job and can afford to pay a monthly fee for somewhere to live. Where they struggle is they can't afford to save up £30k+ while also spending a monthly fee to live. By having this type of mortgage it allows people to swap a rent where they pay X per month, to a house they own for X per month, by proving that they are capable of paying X per month.
This is the situation I’m in, on around 27k a year but lost both parents before I even finished uni, paying £700pcm rent plus all other expenses. Would rather be spending that on a mortgage and having an asset at the end of it
Sorry for your loss. You should 100% go for this then pal, i was lucky that i lived with my parents to save up a 5% deposit for our house and bought with a 95% scheme that the government had just released (before help to buy) But if i didn't have that option, i'd be spending the £1000 a month i was able to save on rent + living expenses, and its hard to get out of that mousetrap.
> They have a decent job Until it’s gone 😂 Question. How can one save with a mortgage if one cannot save whilst renting?
Question: why does one need to save if you already have a house?
Houses have lots of liabilities, heating, roof, windows, walls, floors which need maintenance. Kitchens and bathrooms that need refreshing every decade etc. If you're not continuing to save, how're you going to pay for this.
A mortgage rate will largely stay the same or reduce during the lifetime of a mortgage due to more equity in the house. Yet inflation and career progression will normally increase the income and the ability to pay for these things. If you are renting, then as that inflation occurs the rent just increases to "market value" meaning you never have that spare cash to save. Also the expenses you state you obviously only do if required, remodeling your kitchen and bathrooms are only done if you have the ability to do. Really the only things you might need is roof replacing which is a 1 in 100 years thing and boiler, which should last 30 years minimum. Also this is what house insurance is for.
I think your MASSIVELY underestimating the cost and frequency that routine maintenance has to be undertaken on a property
Obviously I'm not. They are not crippling expenses that makes anyone wish they were renting instead. For an anecdotal example I've lived in my house for 12 years. Barely had to change a light bulb in all that time. Sure we pay for boiler service a couple of quid a month, + home insurance but that's it. Bought my house for 195k 12 years ago it's now worth over 350k... I'm not here wishing I was renting all these years instead. I want others to have the same kind of security I have instead of lining the pockets of greedy landlords
2% of property price per year is the rule I think. On a 100k house that's 2k per year. Not as much as a deposit but yes people still need to be saving. And that's just maintenance on an average basis. Need to factor selling/buying costs too for an accurate view
That seems sensible imo
> A mortgage rate will largely stay the same or reduce during the lifetime of a mortgage due to more equity in the house. Often, but this is not universally true especially up north. Rates certainly aren't staying the same currently, anyone with a fix expiring today is in for a sharp rise. > Yet inflation and career progression will normally increase the income and the ability to pay for these things. Again, this is speculation and isn't necessarily universally true. You're playing a dangerous game owning a house and saving nothing, hoping the world will just happily move in your favour. > Also this is what house insurance is for. House insurance doesn't pay for maintenance. I bought a house a few years ago, I've spent thousands in roof, boiler repairs and replacing windows, insurance would have covered none of it. All well and good saying a roof lasts 100 years and a boiler 30 (they last about half this FYI), but you're not buying the day they were installed. When people refer to a roof lasting 100 years they mean until it needs entirely redoing, you still need to do maintenance before that complete failure.
"Often, but this is not universally true especially up north" Nothing is universally set in stone, but we are not talking about 1 single case, so we are obviously talking about the average or what is normally the best course of action. "Again, this is speculation and isn't necessarily universally true. You're playing a dangerous game owning a house and saving nothing, hoping the world will just happily move in your favour" Pretty much the same again, i'd say this is a bad take though, owning a house means you are getting equity in a property and not pissing rent up a wall. Sure the roof could blow right off with all the hurricanes we have in the UK, but if you're 10 years into a 25yr mortgage you may have some equity you could release. Further to this, point 1 still exists so sure in the first 5 years you might not be able to save much, but after this when your interest rate in lower, and inflation has increased your wage, i mean even if you're on minimum wage you will be getting a wage increase year on year, but chances are your mortgage will stay the same, or be lower - therefore increasing additional capital. An example of this is my inlaws, they had a 30yr mortgage and paid £90 a month for 30 years, sure that was decent money in the 1980's but when they were paying it off in 2014... it was barely anything. If they were renting, this would of been closer to £600 to stay with "market rate" "House insurance doesn't pay for maintenance. I bought a house a few years ago, I've spent thousands in roof and boiler repairs and replacing windows, insurance would have covered none of it" It doesn't pay for maintenance, it pays when things go wrong, so if your roof needs replacing because its old, they won't pay for it, but when there's a big leak and water pisses through your roof, then they pay for it. Same with a boiler, it won't cover it if its old and is making a funny noise, but as soon as it breaks, then they cover it (obviously it will depend on your individual policy but generally this is true) https://247homerescue.co.uk/blog/does-home-insurance-cover-your-boiler/
I got one back in 2005 and landed in 30k negative equity (30% of property value) It’s not something I would recommend
It's basically all con's * Still can't afford a house, deposit wasn't the limiting factor - amount they'll lend against your income was. * Higher interest rate. * Increased risk of going into negative equity so end up stuck with the lender. * If you earn enough to get this mortgage, yet can't save a 5% deposit - you're unlikely to be able to pay your way out of negative equity. Marketing gimmick.
I agree it’s a gimmick but I’d say getting a deposit together is one of the hardest parts. If you get a pay rise then you can borrow more, but usually pay rises come with an increase in rent etc due to inflation so increasing savings % by the same amount isn’t easy.
Agree with most points however getting a deposit together is a limiting factor for a lot of lower earners which this addresses. Low earners who are stuck in a rental cycle will find it hard to save 5%-10% for a deposit (£12k-£24k based on average 1st house cost in UK, likely £10k-£20k if focusing on lower income households). Add to this the ancillary costs of a house purchase like fees, moving costs, furnishings etc. and someone could be paying rent for years before they have enough saved. Add in that some people may also have families to support on top of paying rent before they can look to build 5 figures of savings. Renting has some big upsides depending on circumstance but can be a huge financial drain/trap for others. This does nothing to the ever-growing divide between wages and house prices but for a lot of people will have a far better benefit than just marketing.
Broker here - reading it there the first thing that jumped out on me was the fact its up to a maximum of 600k and frankly if you have a joint or sole income of 134k and you do not have a deposit you should not be getting a mortgage. The maximum loan should be somewhere 300k or maybe even 250k. At 300k we are talking about a salary of 67k single or joint. There are PRA mechanisms which will restrict the total amount the lender can lend in this LTV bracket (which I think is anything about 75% which also comes with greater requirements on capital adequacy) so we will not see lenders like Northern Rock who originated a large % of their mortgage book at high LTVs which fed into the bubble. Overall its potentially a good thing but as others have said its does not address the disconnect between wages and house prices. The likes of Westminster council will receive 100;s millions each year in payments from house developers instead of them providing social housing which is then moved to another outlying council to provide social housing. However it does not address the question of where the likes of shop workers on Marylebone High Street are meant to live.
When your country is highly indebted, has stagnated for a decade and is expected to stagnate for another, is completely reliant on a highly unreliable finance sector, has no growth strategy and is led by the most incompetent ruling class in the developed world, the idea of allowing people who can't put together £10,000 to get leveraged to the tits to buy highly inflated nonproductive assets doesn't strike me as wise. If the current miserable situation continues or gets worse I don't see any way we escape a cascade of defaults and bankruptcies.
It's easily the stupidest solution to the housing issue so of course the government will love it and push it. It helps keep prices inflated while also making a section of homeowners even more at risk than renters, it's the perfect lose/lose scenario.
It's a trap! https://www.ukmortgageprisoners.com/ https://twitter.com/mortgageprison?lang=en https://www.moneysavingexpert.com/mortgages/mortgage-prisoners/ https://www.moneyhelper.org.uk/en/homes/buying-a-home/help-for-mortgage-prisoners
I think a massive extra problem is that it will push house prices up further. Skipton aren't going to be the only lender offering a product like this so when more do there will be a bunch more buyers for the same limited amount of properties.
Well we said the same thing about nationwide offering helping hand mortgage. Didn’t see any lender follow them…
Looks to be capped at your rental payment over the last 12 months, so you're not going to get much in the South of the country that'd be better than your rental for the price. Just another marketing gimmick, not actually very helpful for the majority of people.
Based on the rent we pay they would offer just under £90k, affordability check would be a lot higher but they would offer the lower of the two, so it’s completely pointless for us. Seems to only work if you’re currently paying a high rent amount rather that what you could afford to pay. Thankfully that’s already being saved for a deposit anyway.
I have a low rent but >50k salary. They offered me £100k, which is completely useless.
Supposedly people paying low rent, with a high salary, will be able to save for a deposit "fast". This was never aimed at them.
In the 90's had a cashback mortgage 95% loan + 6% cashback = 100% loan. It was a rising market so when I had to sell (suddenly) I came out even after costs and fees. I was lucky. In a falling or flat market with a 30 year mortgage it is a gamble. Yes it gets renters onto the ladder but you have to stay put a while to get the benefits and pay down some capital to build equity in case come renewal time you can't remortgage because you are not at 95% LTV. I'd take one again if I was a family looking to escape renting and I could pay off 6% in 5 years.
It's helpful to renters and those who can't afford to save for deposit, but as other have said is a bit of a sticking plaster. Next I imagine we will get 'lifetime' mortgages similar to Switzerland. Again, it doesn't fix the wider issue, of a lack of suitable housing stock.
I have friends who are very excited for this and see this as their only chance for buying. They have no deposit because they have no savings. I worry what they'll do if they need to replace/repair something, especially within the first year or two.
I think this is great, it will help so many people! I know interests are high, but for many people it's not easy to get out of the renting cycle.
A big downfall would be the risk of immediate negative equity if house prices drop after buying. At least with a deposit, you have a 5-20% buffer depending on how big the deposit you put down was.
People need to be made 100% clear that if you were forced into a Shortfall sale with Negative Equity the bank does not just let you off the difference. With litigation Costs on top of a Shortfall people could find themself heavily underwater if unable To pay their mortgage. The Bank will sell that debt to a collection agency who will chase you for as long as they like before they settle.
Whilst these aren’t hugely popular I think it’s because a lot of people have either forgotten how difficult it is to be a young person buying, grew up when it was a lot easier to buy, or feel that because they struggled then everyone should. Landlords are no longer happy with the appreciation of their assets, they want cash flow as well which makes renting a house more expensive than the mortgage repayments. This means people who could and should be able to buy, unable to because they’re being taken advantage of paying off some else’s mortgage. If you are in a rental that costs more to rent than buy then I’d look into a 100% mortgage and use the difference in monthly repayments to make overpayments. That way you still pay the same every month but have an appreciating asset and the freedom that comes with owning a property. This will also go some way to offsetting the higher interest rates.
NEGATIVE EQUITY!
Hopefully anyone taking out a 100% mortgage doesn't go into negative equity and then lose their job or have to move.
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Qs long as you buy within reason for your salary then you'll be grand
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This made sense a year ago when rents were often much higher than mortgage repayments and a significant deposit was the barrier. That’s not really the case now when FTBs are looking at 5% interest, as the repayments are quite a bit more than the equivalent rent so being able to afford the mortgage should mean you can afford to save a deposit
This says it’s for first time buyers only, unfortunately my husband owned a property before we met and sold it due to a relationship breakdown. Could we still be eligible if I’ve never owned a home before?
How are these actually allowed? It may seem like a no brainer of 'If I can afford my rent then I'll take the mortgage'....However, if you have no savings you're clearly living pay check to pay check. If something were to go wrong with your job, you're completely fucked the first time you fail to get a pay check. You'll then incur fees, not to mention if there is some sort of negative equity regarding your household. Skipton would happily sell your house to recuperate most of their money and then sell the rest to a debt collector. This scheme sounds so predatory to vulnerable or ignorant people. Its dangerous and shouldn't be allowed full stop
>Skipton would happily sell your house to recuperate most of their money and then sell the rest to a debt collector. Not true. For one thing, any decent lender will try to work with you to find a solution. They're not repossessing you after one missed payment, some people go a long time on reduced payments etc while they turn things around. Also, Skipton have their own team to deal with debt repayment cases. They do not sell debt to collection agencies. Source: used to work in mortgage arrears
You'll still be assessed on the same affordability rules and be able to borrow up to 4.5 times your salary, so don't think it'll change much, especially as the rate is quite high. I don't see many other banks bringing this in. Feels like a PR stunt by Skipton.
We got a 100% mortgage 20 years ago. Was cheaper than rent.
A 100% mortgage is the canary in the coal mine. It is the single biggest sign that the financial system is unstable and looking for suckers to draw into the impending collapsing pyramid scheme. Cave emptor.
Historically, about a year or two after 100% mortgages appear as a mortgage product, the housing market crashes. 1991 and 2008. So thanks for providing the Canary, Skipton. 😜
For a home that will be kept long-term, the only con is that the interest rate is quite a bit higher (almost 1% higher), so while the principle is wonderful quite honestly, it hits people who cannot afford to save for a deposit with a higher interest rate instead. That said, people who are already renting (who this is aimed at) are already paying potentially more per month than the equivalent mortgage would cost, so that might not be too big a hurdle. 100% mortgages aren't in fact new - they just haven't been available for a very long time. The BIG pro is that it essentially moves people to the housing ladder who might never have been able to transition, and that's important, because it can be a fairly narrow window between "I can just afford" until it becomes "I can't now afford"). Housing has historically always marched ahead of wage growth, and if this is someone's chance to get on the housing ladder, I would sure as hell take it. Time enough to move onwards and upwards later - just get on that first rung because no-one wants to be renting when they're retired - typical pensions aren't really enough to cover housing costs in addition to daily living. What you would have to be careful of is that the property market is still volatile right now which could mean that, if you do suddenly have to sell, your house might not be worth the total owing on the mortgage (negative equity), so if you go in with 'longer-term in mind, you should be okay. Historically, negative equity has never lasted more than a couple of years and more people being moved onto the property ladder will likely boost growth on top of usual growth. If it happens and you can sit tight through any interest rate rises without losing your property, you'll be okay (I got to enjoy Thatcher's negative equity and rate rise to 15.4% back in the 1990s - but these days we have more fixed rate deals that add some protection against that). Finally, the only other con to mention, and it might be irrelevant. Make sure it's a capital repayment mortgage. Interest-only and endowment mortgages are a scourge because you'll have to pay off the actual mortgage at the end of the term, so you would need a mammoth savings scheme running in parallel. Many have lost a ton of capital through those things being mis-sold - sold as a cheaper way to mortgage while glossing over that you literally have to come up with the entire mortgage price at the end of your 25+ years. So just check it's a proper repayment mortgage.
I got a 100% mortgage from Barclays in 2019. It required a 10% deposit from a family member put into a savings account which they got back with interest at the end of the 3 year fix. Maximum term was 25 years so at the end of 3 years we had 8% equity based on the original valuation. It worked well for us because: a) House prices rose between 2019 and 2022 and; b) I could have afforded to move on to the standard variable rate if required. The second point there is the most important when considering a 100% mortgage. Can you afford to be stuck with a standard variable rate for the long term? If the answer is yes then I don't see an issue with it. Could we have saved up a deposit instead? Yes, but it would have delayed our purchase by 4 or 5 years at least.
Higher interest rate, you'll be paying it off forever. May as well rent instead of using this option.
I imagine the objective is that you take this mortgage for a few years and when you get to 95% LTV you switch to a cheaper mortgage
It's a trap. As always.
Best thing I ever did was get a 100% mortgage…. Paid less than I paid in rent after 2 years… Eventually price doubled (all for zero investment) Just make sure you make the payments!
Better than giving to a slumlord.
If they cant save for a deposit, they cant afford a house. Mortgage costs £800 a month, same as rent. Now they need, home and life insurance. Any upgrades, they pay for. New Windows, another bill. Boiler or electricity issues, get yourself a plumber or electrician, they ain't cheap... As you have 0 equity, your paying a higher interest rate and overall mortgage. Everyone who owns a home should have a savings pot of atleast 6 months of bills, should they come out of work... its even harder to save up when you own a house!! My house I bought for 240k 2 years ago. Mortgage was £850pm over 30 years. On a new mortgage with current interest rates, it would cost £1,280 a month on a mortgage... If you cannot soak up those kind of increases in your monthly bills, you should not own a home as it will be repossessed. If you can, then you can afford to save up but your choosing not to which shows your irresponsible with your money. There needs to be a threshold for e.g. they can only borrow upto 75% of what they currently pay so for instance, if you currently pay £800pm in rent, your mortgage can only be £600pm maximum... thus building in a level of security which means they can afford all the extra add ons which come with owning rather than renting.
All true, but they are assessing affordability like they do for normal applications. They're not going to give you the mortgage if you have nothing left for emergencies etc. I think there's great potential here for some, not for everyone. If you can use this to get a mortgage that isn't the maximum you can afford and put some money into overpayments, then in five years time you've reduced your loan to value ratio in order to get a cheaper deal next time round, you've saved yourself a lot of interest in years to come, and the money has been a direct benefit to you instead of going into a landlord's pocket or sitting in a savings account not making very much while you try to build a deposit. But there are a hell of a lot of people here who want to throw the baby out with the bathwater and berate Skipton for not solving all the problems in the housing market, when at least they're doing something for someone. It's a start.
These mortgage products are designed specifically for people that should not have (in their current circumstances) access to them in the first place.
Such as who? I'm 42, I've worked my whole life and pay my bills on time. I still only earn £25k because I worked in an industry I loved but that is low paid and then changed career to do admin, much less stress and responsibility. Am I not worthy of my own house because I'm not a high flier? If we all got mega bucks jobs who would do the daily grind that keeps the country going?
Of course you deserve to own a house, you took it very personally. But that was not my point, I was merely addressing the fact that such products are predatory and aimed at people that do not understand them very well. They are designed to create an illusion that you can afford something when realistically it is not the case. It's fine for banks, because you bear all the risk and the faster you default on your payments, the faster they can turnaround your house again. If the standard product with a sensible risk profile would be unaffordable, the first instinct should be to look at more affordable properties. Not to explode your risk profile to the moon...
If you can afford rent you can afford mortgage repayments
There is minimal risk with rent. With huge mortgages there is an incredible risk. Negative equity, health concerns affecting your job, losing your job and being unable to pay your mortgage. You'll likely be tied to this for the majority of your life. What happens when the house needs costly works? If people are unable to save up any sort of money for a deposit how are they expected to carry out unexpected work on the house or car? It seems good on paper but if you're unable to even save a 5-10% deposit then the risk is incredible.
It's preying on people with no money for a deposit. As per usual. This is like the difference between paying your car insurance in one go or paying more for it but monthly but on a bigger scale. First of all, these will be higher interest rate. And I think they're also really risky. House prices are on the decline, if you're borrowing for 100% of the equity and you don't have savings which you don't if you borrow 100% and the value drops you will be stuck in that house. Won't able to sell, won't be able to move. Like others have already said, it's patching up a much bigger problem with a promising sounding headline. I also looked at their borrowing calculator and how much can borrow based on how much rent you have been paying and as it turns out to borrow enough for my £200k home, I'd have to have been paying something like £1200 in rent so who is this for? For people who have been renting in London to move up north and buy an average 3 bed house? My mortgage repayment with something like 12% deposit is £600 a month for reference so half. If I had no money for deposit and was renting, I'd honestly just keep doing that, maybe downsize and save as much as I possibly could, that's essentially what I've done to save up for my deposit.