Skipton Building Society has released a mortgage for first buyers with whom they can postpone their first mortgage payments for three months.
The idea behind the delayed starting mortgage is that new buyers can settle in their new house and have extra money to cover the initial costs of the homeowner.
It comes in response to research of 1,000 people who had bought their first home in the last five years. Skipton discovered that in the first three months of moving she spends more than £ 30,000 and this meant that 63% felt financially tense.
What is more 71% said that the entire relocation process cost much more than expected.
It also discovered that first buyers spend an average of £ 3,500 on furniture to piss their houses, £ 2,600 in kitchen appliances, but they have also been broadcast a typical invoice of £ 1,700 to disposal companies.
For many first buyers these can be unexpected costs and it can come when they are Still pay rent Overlap as lease agreements and completion.
Skipton did indeed discover, 43% had difficulty putting their movement in line with the end of their lease.
Skipton hopes that its new product will enable buyers to have some financial breathing space to get their homes and cover some of the other costs before they start paying their mortgage payments.
Jen Lloyd, head of mortgage products in Skipton“ said: “We hope that this product helps buyers for the first time to settle in their new house and to relieve the tax of the costs associated with buying the first house that goes beyond the deposit.
“At Skipton we believe in Fairness, which is exactly why we have launched our new delayed starting mortgage to give first buyers a fair start in their new home, and the breathing space they need in those critical first few months.”
Delayed start mortgage – what to consider
The mortgage is available for buyers who have to borrow up to 95% Loan-to-value (LTV) And the rates start at 4.87% for a fixed rate of two years for 90% LTV-Lenen.
The highest available rate is 5.40% for a two -year new mortgage with a fixed rate of 95% LTV.
Although no refunds are made for the first three months, interest starts to charge from the first day and will be added to the total mortgage balance.
This point is important to notice for anyone who is considering this mortgage, because this will influence your reimbursements later.
Justin Moy, director of EHF HypothekenSaid via the newspaper agency: “It is more of a cash flow tool than a Freebie, with the interest added to the mortgage for the three months, which can add £ 3,000 or £ 4,000 to the balance of a typical £ 250,000 mortgage, which may go unnoticed until you want to take a new deal in a few years.
“For those who need that cash flow support, this is a great opportunity to buy and not to borrow on credit cards to buy furniture, but simply remember that there is no such thing as a free lunch, especially with mortgages.”
Most brokers have welcomed Skipton for coming with an innovative product for first buyers. However, they also insisted on caution.
Harry Goodliffe, director at HTG HypothekenVia newspapers, said: “It is an interesting step from Skipton and, for the right buyer, it can help to bridge that painful gap in rent and buy.
“But let’s really be: if you need a break before you even started, it is worth asking if the timing is correct.
“The interest rate is still emerging from the first day, so this is not a free money. It is a lifeline, not a solution for the longer term. Anyway, but it can help buyers to secure their dream house for the first time.”