The new five-year fixed-rate mortgage from Skipton Building Society is solely available to tenants and does not call for a guarantor.

In an effort to encourage more people to own homes, a new deposit-free mortgage programme has been introduced, designed exclusively for those who are currently renting.

With the introduction of 100% mortgages from Skipton Building Society, first-time homebuyers won’t need a deposit.

It happens at a time when housing costs are increasing and the cost-of-living crisis is making it harder for renters to save for a deposit.

Here is all the information you require.

What is the scheme for mortgage-free deposits?
The new five-year fixed-rate mortgage from Skipton Building Society is solely available to tenants and does not call for a guarantor.

However, the 5.49 percent interest rate is more expensive than the typical five-year fix of 5%.

The fourth-largest building society in the UK, The Skipton, acknowledged a “gap in the market.”

The lender stated that it anticipates a spike in demand for this item and issued a caution that it might sell out rapidly.

The product, dubbed the “track record mortgage,” will have an interest rate of 5.49 percent and a maximum period of 35 years.

It’s the first 100% mortgage to hit the market in a while, but some have cautioned that buyers need to exercise caution and be aware of the possibility of negative equity.

Charlotte Harrison, the chief executive of home financing at Skipton, however, said that it is intended for first-time buyers who do not have access to funds or family money.

“These enormous barriers to home ownership need to be rethought, and we’re proud to take the lead in bringing to market solutions for such a significant social problem,” she said.

“We must address the challenge of housing affordability in the UK so that more individuals, particularly renters who are caught in a cycle of renting, may own their first house.

“One of the UK’s largest housing difficulties, those trapped in renting, has a significant impact on the social fabric. People are finding it extremely difficult to climb the housing ladder as a result of rising rents and the squeeze on their ability to save for a down payment.

Who is qualified?

A lot of people with CCJs or bad credit are disqualified due to the requirement that applicants have a solid rental history spanning 12 consecutive months and pass affordability and credit checks.

There will be two loan-to-value options available to borrowers: 100% and 95%.

The borrower’s last six months of rental expenses, according to Skipton, cannot be covered by the monthly mortgage payment.

The maximum monthly mortgage payment for a renter, for instance, will be £800 if their rental payments have averaged £800 per month over the previous six months.

Eight out of ten tenants, according to research from Skipton, feel “trapped” in the rental cycle, paying rents that are greater than a mortgage, which makes it harder for them to save a down payment for a home purchase.

In the meantime, the cost of a home for a first-time buyer has gone up by about 18% over the last two years.