A popular choice among first-time buyers, Skipton’s Track Record mortgage was controversial when announced in 2023. But do the benefits outweigh the drawbacks?
What is Skipton’s Track Record mortgage?
Skipton introduced the ‘Track Record’ mortgage in May 2023 to help tackle one of the biggest challenges first-time buyers face: saving for a deposit while paying rent.
In an industry-first since the 2008 crash, Skipton will accept a less than 5% deposit and offer up to 100% loan-to-value (LTV), so you don’t need a deposit to apply.
The eligibility criteria include:
- Applicants must be 21 or over
- Applicants must be able to demonstrate a 12-month history of consecutive rental payments (within the last 18 months) that are equal to or higher than anticipated mortgage payments
- Applicant must be able to demonstrate a 12-month history of paying all household bills. This means you can’t have any missed payments, even on a phone bill
Demand and success
When the product first launched, it was capped at 100% of rental payments, meaning the mortgage payments needed to be the same or less than your rental payments. Also, both applicants had to be first-time buyers.
Due to high demand for this type of mortgage, Skipton has made the product more accessible to other potential buyers. Now, the product accepts:
- Buyers who haven’t owned in the last 3 years
- Increased affordability assessments to up to 120% of your monthly rental payment
- New build flats and shared-ownership properties
- Higher maximum loan terms of 40 years
Skipton reports that, in 2024 alone, the product received over 106 million applications.
The benefits
The Track Record mortgage is an innovative product for the industry and demonstrates Skipton’s commitment to supporting first-time buyers.
Some of the benefits include:
- No deposit required – The main benefit, as mentioned above, is that buyers don’t need to put down any deposit at all to secure a mortgage
- No fees – The current rates come with no added fees, keeping first-time buyer costs down
- Focuses on rental history – For first-time buyers struggling to save, this product is focused on your track record of paying rent and bills on time
The considerations
Whilst there are plenty of benefits on offer for first-time buyers, there are several considerations to factor in before applying for a Track Record mortgage:
- Higher interest rates – As mentioned, this product means added risk for the lender, so the interest rates available are higher than standard home mortgages. If you can save even a 5% deposit, it means we can search the more of the market for you and potentially unlock more competitive interest rates for you compared to you not having a deposit at all.
- Risk of negative equity – If you don’t put down a deposit and borrow the full property value as your mortgage, there’s a risk of falling into negative equity if house prices drop. This means you’d need to pay the lender the difference if you sold the property or it was repossessed. In short, you would owe more than the value of the house
- Strict affordability assessments – Your total borrowing is linked to your current rental payments, and you will still have to undergo affordability assessments, which can restrict your budget. You might be able to borrow more with traditional income-based affordability calculations
- Limited to existing renters – The product is not open to all first-time buyers, just those who are currently or recently renting
Is the Track Record mortgage worth it?
Whilst there are some considerations and the product won’t suit all first-time buyers, this mortgage type is an innovative way to help people take their first steps on the property ladder. The benefits won’t outweigh the risk for all clients, but for renters struggling to save, the mortgage offers the opportunity to get into home ownership.
This product highlights the importance of working with a whole-of-market mortgage broker (like us!) to explore your options. It may be that a product like the track record mortgage is exactly what you need, or, with a little deposit, you could find a rate you didn’t think you could access at a competitive price point.
Our team will explore all your options and find you the best deal across the mortgage term, not just the cheapest rate, to give you the confidence you need in your mortgage decisions.
Speak to an expert
To get started and chat through your home mortgage options, call our experts on 0345 345 6788 or submit an enquiry here to see how we can help.
