New mainstream up-to-100% LTV FTB product that requires less than 5% deposit

K_S

Skipton Building Society has just launched a new product - 'Track Record' - that allows FTBs to borrow with less than 5% deposit, can even be no deposit at all. 

As you would expect, there is quite a bit of criteria (you can see the details on the intermediary criteria page here https://www.skipton-intermediaries.co.uk/criteria/track-record) to meet, and the 'ideal' applicant would probably be an individual or a couple who rent a flat/house, have done so for at least a year, clean credit, minimal debt, etc. Just to be clear, this is not to say that these are the only people they will lend to, just that that is what the 'ideal' applicant looks like based on the published criteria.

It's a brand new product and (as far as I can remember, I might be wrong!) the first post-GFC 100% mainstream LTV product that doesn't require a 'guarantor' or some kind of family assistance. So I'd expect the criteria and calculations to be chopped and changed over the next few months as Skipton learns and adapts to the kind of applications + outcomes they're getting, the demand from FTBs and feedback from intermediaries and applicants. It is available both direct and through intermediaries. It's a single product, a very competitive no-fee 5.49% 5yr fix.

Aberdeenangarse

Yes. It was announced last month…

https://forums.moneysavingexpert.com/discussion/6439284/skipton-to-offer-100-mortgages/p1

K_S

Aberdeenangarse said:

Yes. It was announced last month…

https://forums.moneysavingexpert.com/discussion/6439284/skipton-to-offer-100-mortgages/p1

Yes. This was just to flag that the product is live and that detailed criteria and affordability calcs have been published by Skipton

housebuyer143

K_S said:

Aberdeenangarse said:

Yes. It was announced last month…

https://forums.moneysavingexpert.com/discussion/6439284/skipton-to-offer-100-mortgages/p1

Yes. This was just to flag that the product is live and that detailed criteria and affordability calcs have been published by Skipton

It's not really great though unless you live somewhere with very very cheap houses but expensive rent. Normally cheap houses correspond with cheaper rent 🤷‍♂️ £500 rent = £95k. You are not getting anything a lot of places for that.

K_S

housebuyer143 said:

K_S said:

Aberdeenangarse said:

Yes. It was announced last month…

https://forums.moneysavingexpert.com/discussion/6439284/skipton-to-offer-100-mortgages/p1

Yes. This was just to flag that the product is live and that detailed criteria and affordability calcs have been published by Skipton

It's not really great though unless you live somewhere with very very cheap houses but expensive rent. Normally cheap houses correspond with cheaper rent 🤷‍♂️ £500 rent = £95k. You are not getting anything a lot of places for that.

@housebuyer143 True, it is pretty restrictive on affordability. One would expect Skipton to aim for very low volumes, starting very conservatively on affordability given that it's a brand new 100% LTV product and then tweak it over time. If it's helping no one, it's not going to do much good to them either!

But what it does is that it opens up an option that wasn't there earlier. For example it could work for FTBs who are renting in a relatively expensive place and willing/able to move outwards or to a different part of the country.

It remains to be seen how it all pans out but hopefully it's a start and more lenders start offering similar innovative products, especially given the current state of rental demand Vs supply.

No19v87

It’ll be a very niche market, based on my back of the fag packet maths?

5.49% over max of 35 years on even a very conservative purchase price of £200,000 would mean your current rent would have to be in excess of £1,100. 

Plus affordability for a mortgage repayment of £1,000 pcm would knock out a huge proportion of FTBs.

K_S

No19v87 said:

It’ll be a very niche market, based on my back of the fag packet maths?

5.49% over max of 35 years on even a very conservative purchase price of £200,000 would mean your current rent would have to be in excess of £1,100. 

Plus affordability for a mortgage repayment of £1,000 pcm would knock out a huge proportion of FTBs.

@No19v87 You're spot on on the first part and the rent based affordability calcs. But that's likely how Skipton wants it, at least at this early stage, more like a gap filler than a wide-ranging product.

Not so sure about the second as based on the FTBs I see who are renting (mostly professional couples in Greater London and large city centres so my experience might not be representative), applicants are more likely to be limited by the rent-affordability than the mortgage-affordability, and Skipton will take the lower of the two to cap the loan size.

Koalah

I commented on the other thread. I applied as met all the published criteria. Excellent credit score and report with Experian. Pay high rent in current area but am relocating so had been looking for rentals and struggling due to shortage. Plenty of homes to buy. Did their first calculator and was offered enough to afford one of the homes in area. Did the mortgage in principle application, for £25k less than what they said was max they’d offer. Was rejected. Said as a result of soft search with Experian. Rang Experian, no issues. Tweeted in response to guardian article and skipton responded to contact them as there were errors in calculator resulting in everyones application.
rang them and they said, sorry I failed their ‘internal scorecard’. I asked what that was when I’d passed everything else they published and they said they could provide no additional information as to why. Wished me all the best with my hunt for a mortgage.
so excellent credit score (just under the full 999), 9 year rental history no missed payments, used creditladder for 4 years to report rent to Experian, and still rejected.

K_S

Koalah said:

I commented on the other thread. I applied as met all the published criteria. Excellent credit score and report with Experian. Pay high rent in current area but am relocating so had been looking for rentals and struggling due to shortage. Plenty of homes to buy. Did their first calculator and was offered enough to afford one of the homes in area. Did the mortgage in principle application, for £25k less than what they said was max they’d offer. Was rejected. Said as a result of soft search with Experian. Rang Experian, no issues. Tweeted in response to guardian article and skipton responded to contact them as there were errors in calculator resulting in everyones application.
rang them and they said, sorry I failed their ‘internal scorecard’. I asked what that was when I’d passed everything else they published and they said they could provide no additional information as to why. Wished me all the best with my hunt for a mortgage.
so excellent credit score (just under the full 999), 9 year rental history no missed payments, used creditladder for 4 years to report rent to Experian, and still rejected.

@koalah Thanks for sharing your experience and sorry to hear about the decline.

Every mainstream lender does what is called "credit-scoring" for each application, every lender will have their own version of it. There are lots of different factors that go in to a 'scorecard', each with different weightages. It could include things that you expect - credit history - and lots of other factors that you might not expect, such as employment type/history, age, age of bank account, current account turnover, address stability, linked profiles, etc. etc.

As you would expect, lenders don't publicise what exactly goes into their scorecard (not even to brokers), so it's sometimes hard to say why an application failed a lender's credit-scoring though an experienced broker *should* be able to guess at what might have caused it. If there is nothing at all obvious, some lenders BDMs will dig into the details and help the broker with identifying the issue.

Good luck, I hope you're able to get the mortgage you need at some point!

Koalah

K_S said:

Koalah said:

I commented on the other thread. I applied as met all the published criteria. Excellent credit score and report with Experian. Pay high rent in current area but am relocating so had been looking for rentals and struggling due to shortage. Plenty of homes to buy. Did their first calculator and was offered enough to afford one of the homes in area. Did the mortgage in principle application, for £25k less than what they said was max they’d offer. Was rejected. Said as a result of soft search with Experian. Rang Experian, no issues. Tweeted in response to guardian article and skipton responded to contact them as there were errors in calculator resulting in everyones application.
rang them and they said, sorry I failed their ‘internal scorecard’. I asked what that was when I’d passed everything else they published and they said they could provide no additional information as to why. Wished me all the best with my hunt for a mortgage.
so excellent credit score (just under the full 999), 9 year rental history no missed payments, used creditladder for 4 years to report rent to Experian, and still rejected.

@koalah Thanks for sharing your experience and sorry to hear about the decline.

Every mainstream lender does what is called "credit-scoring" for each application, every lender will have their own version of it. There are lots of different factors that go in to a 'scorecard', each with different weightages. It could include things that you expect - credit history - and lots of other factors that you might not expect, such as employment type/history, age, age of bank account, current account turnover, address stability, linked profiles, etc. etc.

As you would expect, lenders don't publicise what exactly goes into their scorecard (not even to brokers), so it's sometimes hard to say why an application failed a lender's credit-scoring though an experienced broker *should* be able to guess at what might have caused it. If there is nothing at all obvious, some lenders BDMs will dig into the details and help the broker with identifying the issue.

Good luck, I hope you're able to get the mortgage you need at some point!

My guess is age. I’ve had same bank account for 20 years, same address for 9 years. Most likely issues - I’m paid weekly, so if they were looking for my monthly pay amount, they wouldn’t see it as the lump sum. I’d been doing all the standard things to build credit over the years - getting a credit card and managing it, paying insurances monthly instead of upfront.
I’ll keep looking for a rental, and keep working at a side business alongside full time work to try to eventually fund outright. I’ve probably got more chance of that than getting a mortgage now.
There were a lot of downsides to Skipton’s product, including penalties and limits on overpayments. So at end of fixed 5 years at the interest rate they were offering, you’d still be at 98%, unless you found the right property that you could spend the overpayments on improving and developing it to increase its valuation.

waseem432000

Personally looking at 95% LTV mortgages as this one won’t lend enough for anything in my area. (Pay £1250 a month in rent so can borrow close to £200k while I have a NatWest AIP for £250k as I bank with them). I know most lenders have 95% products due to government guarantee till end of the year but I am hoping they extend it for another year (especially with elections next year) as I am planning to buy early next year when my LISA matures.