Skipton 100% mortgage

100% mortgages have a place in the market but need to be approached with caution. If house prices go south, you could run into problems fast. In the worst case scenario, you could end up in negative equity, with a mortgage debt higher than the value of your home, leaving you stuck and unable to move without taking a financial hit. That prospect in itself could be enough to put you off a 100% mortgage. I think lenders should take history of rent payments into account to give them confidence that clients can keep up with monthly payments. Overall, though, this is a positive option that Skipton are considering.

Skipton Building Society's 100% mortgage without having to cough up a deposit may sound appealing on the face of it. Unfortunately, you still can't just waltz into a bank and demand a 100% mortgage just yet. You will need to meet income criteria and show that you can afford to pay the loan back. The rates and fees on these products will no doubt be skyrocketing given the risks Skipton will be taking on this product. But hey, at least you don't need a guarantor on this one. The lender also seems to be bullish on the future of the British housing market, which is reassuring to hear as a portfolio landlord and developer. But let's face it, the real problem here isn't demand, it's the supply of housing. We just don't have enough houses to go around, thanks to all the pesky planning laws and red tape. Maybe if we stopped arguing about Brexit and small boats for five minutes, we could actually focus on building some damn houses.

This is an interesting development that the market needs. Whilst it may be a bold move, I do think other lenders would follow suits if it's approved. Since Help to Buy has been removed from the market, there has been a first-time buyer void, which this very may help fill. The negative equity fear will raise some eyebrows and this would have to be a detailed conversation with any first-time buyers looking to pursue this as an option. In comparison to renting, though, is the risk that high, with rising rents chomping away at disposable incomes? It may be a safer bet to get on the ladder and have a fixed monthly mortgage payment, which allows you to build equity within an asset. The biggest risk with the negative equity is if someone is planning on buying a property and trying to sell quickly. If the property is going to be a long-term home, market trends all point in the direction that they should see the value grow. Skipton is also a risk-averse lender so not everyone will be eligible.

I'm all for a 100% mortgage. In particular, one that works like this which I suggested about 5 years ago to a lender, but the FCA stopped it having legs. Assess affordability using the lenders' preferred stress rate. Let's assume today that's 2% above the pay rate of say 5-year fixed at 6% for such a high LTV mortgage. Average mortgage of £245,500 to match average house price (Money.co.uk) over 35 years = £1,400 per month. Stressed payment = £1,744. Make a condition of this 100% LTV product that buyers must pay the stressed figure as payment for the 5 years because it's been cleared as affordable, so no reason they can't! Difference = £344 monthly overpayments automatically applied. After 5 years, mortgage balance = £209,500, making LTV (assuming no change in house price) = 85%. Compared to what would have been 96% otherwise. Clients now free to take a 'normal' mortgage anywhere and didn't need a deposit but saved it retrospectively! Lenders, call me.

A 100% mortgage with house prices falling. What could possibly go wrong? This is a really bad idea that risks leaving unwary first-time buyers in negative equity and at risk of losing their home. Skipton are a good lender generally, so I'm surprised they're even proposing this.

100% mortgages are music to our ears here at Mortgage Shop. As a company, we have had access to two lenders offering 100% mortgages for shared-ownership property transactions for the past 10 years, we have the proof at hand of the benefit that this kind of borrowing can have for first-time buyers. It's a big signal that the brains at Skipton agree with us that, although we could be in a corrective period for property values, the medium to long-term outlook is only one way, and that's upwards. It's a clear fact that with a shortage of properties to purchase still being the case across the UK, the price of these properties will increase in time, alleviating the potential risk to negative equity occurring. Obviously, Skipton could possibly ramp up its surveyor requirements for the property valuations for these 0% deposit schemes to check that the property stock being included isn't low quality and not in need of substantial improvement for a potential resale.

100% mortgages could be good news for the market and borrowers in general but I think that there needs to be involvement from all sides and customers receiving advice will be vitally important.

if people are buying with a 100% mortgage they need to be aware that they may not be able to make an onward move for several years. In addition I think that if the FCA do approve this mortgage then the lenders must be made to provide product transfers for customers at renewal even if they are in a negative equity situation.

I think I would recommend this type of mortgage to a customer with no deposit to enable them to get on the property ladder as this would surely be better than paying rent on a monthly basis.

There will always be a risk of negative equity with any high loan to value mortgage so I think it also falls on the adviser to make the customer aware of this and the potential risks associated with it.