Divorcees offered zero deposit mortgages to get back on housing ladder.

[Twiglets1]

Article in the Telegraph saying Skipton Building Society are expanding their 100% mortgage offer, which was originally meant for first-time buyers, to cover people who had once owned a home but have fallen off the housing ladder.

Skipton said people who haven’t owned a home for at least three years could now apply for its zero deposit mortgage, so long as they haven’t missed a rental payment in the last 12 months and their mortgage repayments won’t be above their current rent.

Skipton’s loan is fixed at 6.19pc for five years, carries no fees and can be stretched over a maximum term of 35 years.

I personally think 6.19% is too high to Fix for 5 years but apart from the rate, think the scheme has benefits. I would like to see other Lenders offering the deal at the same rate those with a 95% deposit can get, currently standing at about 6%. What do others think?

https://www.telegraph.co.uk/money/property/mortgges/divorcees-zero-deposit-mortgages-housing-ladder/

I think, as always, Skipton are ahead on a scheme that is absolutely great for PR but useless for most folks in practical terms.

The 100% mortgages only apply to FTBS with a squeaky clean credit record, and they can only get a mortgage to equal their rent. Thus are no good to people who moved in with folks or went bargain basement, damp squalid rentals to save from overpaying.

Great idea to help divorcing couples, but how does the three years of not being a home owner help them, exactly? You have to endure three years of little security until we deem you fit to lend to. Thanks! O_O

When you scratch under the surface of the majority of these announcements, something unpleasant usually lies.

I think fixing at 6.19% for five years iwith no deposit required is preferable to renting. Id be very happy to do that rather than rent for the rest of my life.

I do agree @KievLoverTwo that it's unhelpful to make divorced people wait 3 years before being eligible, can't see the point in that really unless it's to ensure there is no "wave" of recent divorcees applying for the scheme.

I've thanked you for your response, mainly to test out the new Mumsnet feature!

It's a good scheme for many people I think, would just prefer personally to wait until interest rates reduce slightly before fixing for 5 years at a rate that is close to the peak.

At the end of the day they have to be responsible in their lending, 3 years post divorce most people have the split of finances/assets sorted and it literally says in the article they'd need to have 12 months renting with no missed payments and the mortgage can't be more than they were paying renting. Its inherently more risky to lend £0 deposit mortgages. Looks like its open to anyone and not just divorced couples which is good.

I understand the 12 months bit with no missed payments and sure, divorces take time to sort out but why 3 years post divorce not 2 years say?

100% mortgages are slightly more risky than 95% mortgages for the lender but I feel they have already compensated for that by requiring a 12 month record of rent with no missed payments and the mortgage not being more than the rental amount. So they could charge the same rate as 95% mortgages, in my opinion.

And there was me thinking you were being genuine, tut!

Btw, the stats show with the 16.5% difference between homes coming to the market and sold STC prices has nothing to do with Charlie. Most of his guests are EAs who don't really want to talk down the market, but the data is forcing them too.

Interestingly the week 34 EA guest kept banging on about 'it needs to be against the law for EAs to overprice with penalities, they are an embarrassment to our good name and lose home owners tens of thousands of pounds.' - from an EA with 20 plus years in the business. So the overpricing trend is annoying EAs.

So, nothing to do with Charlie, but I do suspect HE gets some of his stats from that show.

As much as I dislike financial institutions they cannot just lend willy-nilly in order to 'help people'. New mortgage products are scrutinised very carefully and the FCA will require solid proof of affordability if they fail the 'usual' checks.

Don't disagree. But, three years?

i guess with this only being available to renters and not people living in mum and dads rent free makes sense though - because the renters are going to struggle to save a deposit but the ones with parents should be saving and be able to get a deposit together @KievLoverTwo

I did genuinely want to thank you for being first to reply to my OP @KievLoverTwo but I also wanted to choose you out of every other Mumsnet poster to test the new feature on 😀

Yes I agree with that - people who are able to live at home rent free or paying vastly reduced rent have a big advantage over those who don't in terms of being able to afford to save a decent deposit.

Maybe 100% mortgages like this level the playing field a bit? Basically a good idea as long as the new buyer understands that negative equity is a real possibility in the short term. And as long as stringent tests are done to make sure the mortgage is truly affordable.

Did you actually read the article? The actual headline should be 'offer for FTB's expanded to include people who haven't owned a home for 3 years'.
And one of the core demographics are divorcing couples. Other reasons are even stated in the article, such as critical illness.

3 years is probably to ensure that that their financial circumstances are as close to FTB as possible, i.e. it's people who have really 'fallen off the ladder' as opposed to having just sold a house and immediately buying a new one.

I suppose it’s one of those pesky schemes helping people to get on the property ladder (back on it in this case) who otherwise might be excluded.