A New Deposit Free Mortgage Has Been Launched To Help First Time Buyers Who Are Renting

A new deposit-free mortgage is being launched to help those who are renting to buy their first home.

For many of us, the idea of owning a home while we’re young can seem very unrealistic thanks to the huge increase in house prices and the cost of renting. For most young people who are renting, especially in London and the surrounding areas rent is at an all-time high, and with the cost of living crisis bills and everything else are steadily increasing too.

Of course, if you’re spending the majority of your paycheck on rent, bills, and food this will leave very little when it comes to having the option to save money for a house deposit. Even for young people who are able to put aside a bit of money each month, it could take years to save up enough for a deposit.

With so many young people being stuck in the rent cycle and unable to save for a home, a new mortgage has been introduced allowing potential buyers to skip the deposit altogether.

How can I get the deposit-free mortgage?

Skipton Building Society has launched the UK’s first 100 percent LTV (Loan to Value) mortgage, aimed at renters and first-time buyers. This means that people who want to buy a house can do so, without needing to put down a deposit.

The mortgage will be available to all tenants who can provide evidence of mortgage affordability and you can borrow up to 100% of a property value. Skipton’s research has shown that there are up to 4.6 million households privately renting in England, which is almost double the number in 2000. Many of these people feel trapped in the rent cycle as they have no choice but to spend most of their earnings on rent and are unable to save for a home.

With increased rent and increased house prices, it’s next to impossible for a lot of young people to be able to save enough for a house deposit, so Skipton have launched this mortgage due to a gap in the market where young people are struggling to be able to save to buy a home.

While this may sound too good to be true, it’s important to note that the interest rate of 5.49% is more expensive than the average five-year fixed of 5%.


Are recent graduates eligible?

Yes, recent graduates may be eligible to apply but there are a few requirements.

You must:

  • Be over 21
  • Be a first-time buyer
  • Undertake a credit check
  • Be able to show proof that you’ve paid rent (on time) for the last 12 months
  • Have no missed payments for bills or credit cards over the last 12 months
  • Have experience and proof of paying all household bills for the last 12 months
  • Not be looking to buy a new build flat

So, while students and recent graduates may be eligible to apply once they turn 21 it’s important to note that you will need a year of rental history, and living in student accommodation might not count if you’re not responsible for paying all of the bills.

Council tax is also cited on the Skipton Building Society website as one of the bills you’ll need to provide proof of, and students don’t pay council tax. However, if you can provide evidence of paying other utility bills for a year, you may be able to get around this. It may be the case that while you might not be eligible as soon as you finish uni, if you rent for one year after you graduate you will then be able to apply.

One key benefit is that the monthly mortgage costs will not exceed tenants’ current monthly rental costs, making it a better deal for them and allowing them to own their own homes rather than wasting their money on rent.

Many people are also pointing out that the cost of buying a first home is so high, it’s still unachievable to young renters who won’t be able to get a mortgage to cover the cost of the average property where they live. However, it’s still a step in the right direction and recognizes the struggle and reality of many young people living in the UK.