I recently put up a video on my YouTube channel about the return of 100% mortgages. As a property investor with a property channel, I am so excited to talk about this! 100% mortgages are back in the UK for the first time since 2008. It’s huge! Skipton Mortgages were the first lender to introduce buy-to-let mortgages in the UK. Now, Skipton have finally brought back 100% mortgages for first-time buyers!
One reason I'm so excited about writing this article is that because I started investing in property in 2008, everyone says, “Oh, it was easy for you because you could get 100% mortgages.” In reality, they scrapped it just after I got started, but still everyone says that! Now they're back, so there are no excuses for anyone getting started in 2023!
In this article, I'm going to talk about what 100% mortgages actually are; the exact requirements of Skipton Mortgages; and how to find out if you are eligible or not.
1. What is a 100% mortgage?
Normally, when you buy a house, you will have to put down a deposit. Say you want to buy a house for £300,000, as an example, the lender may need you to put down 20%. That would require you saving a whopping £60,000. On top of this, the lender will often also charge a fee just for giving you the loan. So that’s a good chunk of cash all in all!
A 100% mortgage is when the lender loans you 100% of the money to buy the house. This means you don’t have to put down a deposit, and you will owe the lender the full amount. Therefore, you can get the property ‘no money down’!
2. Who can get a 100% mortgage?
Skipton Mortgages are only offering 100% mortgages to first-time buyers who want to buy the house they are living in. On top of this there are additional eligibility criteria, these include having good credit; renting the property for a minimum of 12 months; and the usual affordability checks. What they are willing to lend you will also be based on your current rent. If you pay around the UK average, which is £1k per month, you could get up to £163k.
Skipton Mortgages doesn’t charge a fee on this product, so the only thing you need to worry about is paying your legal fees. These fees are likely to be around the £1,000 mark.
3. Are 100% mortgages a good thing?
I think this is a great opportunity for first-time buyers. I have seen from history that for many working-class people, buying a house has been a major source of accidental wealth creation. However, saving up a deposit of £60,000 is almost impossible for many people. 100% mortgages can help people get on the property ladder and begin building wealth.
But there are some potential downsides to consider. If the house you buy drops in value, you may end up in negative equity. That said, if you plan on living in the house for a long time, the value of your home will likely increase eventually.
Another thing for you to consider is interest rates. Skipton Mortgages currently charges about 5.3%. You need to ensure you can pay your monthly payments based on the current rate and based on any changes that might happen in the future.
Remember, this is all about buying a property to live in, however. Skipton isn’t offering buy-to-let investors 100% mortgages.. yet! If you are looking to get started investing in property, there are a number of ‘no money down’ strategies I can teach you. Book a ticket to my next event here, they are only £1!