One-of-a-kind ‘Delayed Start’ mortgage launched in UK | First-time buyers

A one-of-a-kind mortgage providing a serious monetary perk – no repayments for the primary three months – has been launched within the UK.

The deal, unveiled by Skipton Constructing Society, is the most recent innovation geared toward cash-strapped first-time consumers and is designed to offer them with a little bit of respiratory area as they settle into their new property.

Nevertheless, whereas the brand new Delayed Begin mortgage ought to assist ease the pressure of the prices that include shopping for a primary dwelling, these first three months should not free. Curiosity will begin to accumulate from day one and shall be added to the general mortgage stability – so some might view this as one thing akin to “purchase now, pay later” for mortgages.

Skipton stated the brand new product was completely for first-time consumers and accessible to these borrowing as much as 95% of a property’s worth.

It stated its survey of people that had purchased their first home within the final 5 years discovered that first-time consumers have been spending upwards of £30,000 in the course of the first three months of transferring in. This was inflicting virtually two-thirds of them to really feel “financially strained” throughout that interval, with many saying that the complete transferring course of “value much more than they anticipated”.

A spokesperson for Skipton stated the brand new product “will allow first-time consumers to settle into their new dwelling with no mortgage repayments due for the primary three months, permitting them to handle the additional prices related to shopping for and transferring into their first property”.

David Hollingworth on the dealer agency L&C Mortgages stated this deal would enable individuals to “regain a little bit of stability” earlier than their mortgage funds kicked in. However the curiosity shall be added on, so this could possibly be seen as “extra like a fee vacation”. These making the most of the deal can have a barely greater mortgage, and it “will subsequently value you extra”.

That is the most recent in a line of offers geared toward making it simpler for first-timers to get on to the property ladder. In 2014, Leeds constructing society launched some mortgages with credit card-style “0%” introductory interest rates, though clients nonetheless needed to repay the capital in the course of the first few months and the curiosity they didn’t pay in the beginning was added into the later funds.

Extra just lately – in 2023 – Skipton launched a deal permitting people who find themselves renting to borrow 100% of the property’s worth.