Skipton Building Society has launched a new mortgage designed to ease first-time buyer financial pressures by delaying their first mortgage payment for three months.
The new Delayed Start mortgage, which is only available through brokers, offers buyers a three-month deferred repayment period after their house purchase completes. However, this doesn’t mean that homebuyers don’t have to pay for these three months at all, as interest will still be charged from day one and added to the overall mortgage balance on the 1st of the month. This means that borrowers are effectively given a payment holiday but will end up paying more interest over the term of their mortgage, as payments will include the interest accumulated over the first three months.
However, the delay in payments does allow borrowers to benefit from a bit of breathing space as they adjust to the costs of home ownership.
Jennifer Lloyd, head of mortgage products and propositions said: “We recently ran a survey, and it confirmed what many of us already suspected: most first-time buyers feel financially stretched in the first few months after moving into their new home. It’s a costly time. Many are transitioning from renting to owning, which often means a period of double payments – rent and their first mortgage repayments overlapping. Add in moving costs, furniture, white goods, deposits, and now stamp duty, and it all adds up quickly.”
According to Skipton’s research, 71% of home movers said the entire moving process cost them much more than they’d expected, with many facing expenses totalling nearly £30,000.
Who’s eligible?
At least one applicant must be a first-time buyer to qualify, and the scheme is available to homebuyers looking to borrow up to 95% of the property value, which means only a 5% deposit is required.
Buyers can choose either a two or five-year fixed rate, giving them peace of mind that their mortgage payments won’t change for the term of their deal.
The Delayed Start mortgage can’t be used in conjunction with any government schemes such as the Shared Ownership or First Homes schemes in England or the Help to Buy scheme in Wales.
It can be used to purchase either new build homes or older properties.
