Skipton Building Society has launched a new mortgage aimed exclusively at first-time buyers, offering a three-month break from repayments in a bid to ease the financial burden of getting on the property ladder.
The Delayed Start Mortgage allows borrowers to defer their first payment for 90 days, with interest accruing from day one. The product, which went live today, is intended to give first-time buyers room to settle into their new homes without the immediate pressure of a monthly mortgage bill.
The move follows research commissioned by Skipton which found that first-time buyers spend more than £30,000 in the three months after purchasing a home, leaving 63% feeling financially stretched and 71% surprised by the full cost of the process.
Costs quickly mount, the lender says, with average outlays including £3,500 on furniture, £2,600 on kitchen appliances and £1,700 for removals. Around 35% of first-time buyers also face overlapping rental and mortgage costs due to the timing of lease agreements, with 43% saying it was difficult to coordinate their move with the end of a tenancy. Over a quarter of buyers cited delays in the process as a contributing factor.
Skipton said 61% of first-time buyers felt that the financial shock of moving dampened the excitement of homeownership, with many taking as long as eight months to recover financially.
Jen Lloyd, head of mortgage products at Skipton, said: “Becoming a homeowner 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 onto the property ladder.
“That’s why today I am pleased to announce the launch of Skipton Delayed Start mortgage, giving first-time buyers some breathing space with no mortgage repayments due for the first three months. 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.”
The product is available at up to 95% loan-to-value and can be used in conjunction with Skipton’s Income Booster proposition. Rates start at 4.87% for a two-year fixed deal at 90% LTV and rise to 5.40% for new-build borrowers taking a two-year fix at 95% LTV. A five-year fix at 95% LTV is available at 5.00%.
Andrew Montlake, chief executive of Coreco, welcomed the launch, saying: “Yet again Skipton have delivered some innovation into the market backed by some careful research into what would most help first-time buyers. Delaying payments for three months can help take the pressure off in the early days when settling in and making a house a home is a top priority.
“Of course, this product will not suit everyone, and professional advice should be taken to fully understand the product, but it is yet another welcome option available to homebuyers that gives them choice.”
