People looking to get on the property ladder have been given a new mortgage option. Buying a house for the first time is financially straining but a bank has introduced a new scheme to help people.
As reported by The Sun, Skipton Building Society has announced its Delayed Start Mortgage. It gives borrowers mortgage payments of £0 for the first three months after they move into their home. As well as the postponed payments, the scheme is available to buyers with deposits starting at just 5%. It also offers fixed rates from 4.78% to 5.4%.
According to Skipton Building Society, the Delayed Start Mortgage will give buyers important breathing room for extra expenses. Research shows that first-time buyers spend an averge of £3,500 on furniture and £2,600 on kitchen appliances.
The three-month plan helps relieve the immediate pressure of monthly mortgage payments. It allows homeowners to move into their new property without the stress of extra outgoings.
Jen Lloyd, head of mortgage products at Skipton, said: “Becoming a home-owner should be one of the most exciting milestones in someone’s life.
“However, our research shows that first-time buyers are struggling and feel the cost associated with the move takes the shine off getting on to the property ladder.
“We hope that this product will help first-time buyers settle into their new home and help ease the strain of the costs that come with buying a first home that go beyond the deposit.”
However, interest will accrue over the three month period. This means the total people owe will increase as the unpaid interest is added to the total mortgage costs.
For example, if you choose a two-year fixed rate of 5.2% with a 5% deposit, your first three months will cost £0. After this, your mortgage will continue at the same 5.2% rate.
This means your monthly payments for the remaining two years would be £1,516.27. Whereas, this figure would be £1,491 if you did not opt for the three-month payment holuday.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Skipton should be applauded for this innovation as it is yet anther example of the building society ethos of actually trying to help first-time buyers with real-world solutions. However, there is no such thing as a free lunch.
“Enjoying a mortgage sabbatical will cost around £600. Also, it is not the cheapest rate for a 95% loan-to-value fee-free product.”
