I remember a time when I used to encourage potential new borrowers by saying ‘enjoy being a First Time Buyer’ – meaning, appreciate the fact that you only need to focus on finding and buying the house of your dreams, without the stress and strains of selling too.
That ‘only need to’ bit, however, has amplified somewhat because if we’re being honest, it’s a really challenging time to be a First Time Buyer. Research recently undertaken by Skipton Building Society shows that on average it takes 7.9 years to save the deposit for a first home and in some areas of the country that extends to 10 years. Coupled with the recent increases of mortgage rates and knock-on challenges with affordability, the cost-of-living crisis and the end of Help to Buy, there’s a lot for someone buying for the first time to tackle. Of course, some First Time Buyers have family members or friends who are able to help them out with a deposit but for others, lender innovation is key. As a lender we need to find ways of helping First Time Buyers, as they are a fundamental component of a buoyant housing market.
As you would expect as a mutual, helping First Time Buyers own their own home is one of our strategic objectives - and at the time of writing, we have gained over 10,000 first time buyers this year.
Let’s look at a couple of ways of how we have achieved this:
Joint Borrower Sole Proprietor
The encouraging news for First Time Buyers is that there are a larger number of lenders who offer this as part of their proposition than there used to be.
At Skipton, we don’t need there to be a family relationship, which provides more flexibility for you as a broker. For example, we have helped friends help friends, an employer helping a key worker – and we are also able to have 4 people on the application and use all 4 incomes.
And if we are saying that the average FTB is getting older, it stands to reason that the parent helping is likely to be older. With that in mind, we have recently increased the maximum age of the parent helping at expiry of the mortgage to 80, where they are topping up for affordability.
Track Record
With Track Record we recognised that not everyone has access to the Bank of Mum & Dad. We also recognised that there was a clear gap in the market for First Time Buyers who have a decent track record of making rental payments and can demonstrate mortgage affordability.
Our goal with Track Record is to tackle the issue of housing affordability, specifically for renters who feel trapped in a cycle of renting. Brokers have been telling me for some time that it doesn’t make sense that someone who has a history of making rental payments, can’t have a mortgage where their monthly repayments are likely to be less than the rent they are paying.
Brokers have been able to use this innovative product to stimulate conversations with potential borrowers and as we start to see completions, there are some fabulous examples of First Time Buyers who wouldn’t have been able to buy without it.
As well as First Time Buyers finding a new home, we’ve also seen existing tenants taking the opportunity to buy their home from the landlord – keeping the home they’ve enjoyed living in whilst at the same time reducing the monthly outlay.
The positive outcomes we have already seen from Track Record means that we have been able to open up our criteria on this product to include customers who haven’t owned a property in the last 3 years, meaning our no deposit mortgage is no longer just for First Time Buyers and now open to more of your clients!
I look forward to working with you all in continuing to shape our proposition and encouraging more First Time Buyers into their first home.
To find out more, visit our First Time Buyer page or speak to your local Skipton BDM.