23 July 2023

Alternative Approaches to Lending – First Time Buyers

By Derek Adams, Skipton Building Society

At Skipton Building Society, we have set an ambitious strategic objective to help eighty thousand first time buyers realise their dreams of home ownership over the next five years. We believe that everyone deserves a chance to have a place they truly call home and we are committed to making this dream a reality.

It is vital therefore that we continue to ensure that our lending proposition adapts to the challenges faced by First Time Buyers in todays housing market. We offer up to 95% loan to value including new build houses on standard purchases, Shared Ownership mortgages in England and Wales, Homes England mortgages, LIFT scheme mortgages in Scotland, Joint Borrower Sole Proprietor and our latest addition of up to 100% loan to value with our “Track Record Mortgage” proposition.

With Track Record we recognised that there is 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.

The problem of rental cycles has persisted in society for many years. A survey of two thousand adults (commissioned by Skipton Building Society) residing in rental properties discovered that 86% of them dream of one day owning their own home. However, with rising rents & the strain of living expenses, saving for a deposit becomes difficult and therefore the dream of homeownership becomes increasingly more challenging.

It should be stressed that the proposition can’t work for everyone. Applicants need to meet our prudent policy, lending criteria and affordability to qualify. It could be harder to get the mortgage to fit in certain regional areas depending on rental payments and house prices, however, a solution may be workable for borrowers who are willing to compromise. In the survey mentioned above, 48% said they were willing to give up a specific requirement they had always wanted for their first home. For example, this could be moving to a more affordable area or downsizing to a property with less bedrooms to get their foot on the property ladder.

One of the ways that we gather feedback on how our mortgage proposition could be enhanced is in our regular Broker Listening Forum. At these forums we bring together key stakeholders from Skipton and advisers from the intermediary market to discuss what is needed from lenders in this challenging market. We take this opportunity to listen to those who are closest to the challenges faced by brokers and seek to understand how things could be improved– and then feed back on areas where we can support, or if we can’t, give reasons why not. Contact me or someone from the Legal & General Mortgage Club if you’d like to be involved in future sessions.

I believe our Track Record Mortgage here at Skipton Building Society is a great example of innovation being shown by a lender and we look forward to working with the Legal & General Mortgage Club to identify more ways of getting First Time Buyers into their first home.

Derek Adams

National Account Lead

Skipton Building Society

These views are Derek’s own.

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