London developers are working with mortgage lenders to offer no-deposit mortgages to tenants with good rent payment histories.
Current the average monthly rent in the capital is £2,736, apparently making deposit-saving difficult for many aspiring buyers.
Foxtons says the combination of developer incentives and more flexible lending criteria is beginning to reshape access to home ownership for tenants who have been priced out of the traditional mortgage market.
So-called Track Record mortgages offer up to 100% loan-to-value for eligible applicants who have not owned a property in the past three years. Borrowers aged 21 or over must provide evidence of rental payments covering at least 12 of the previous 18 months.
Some lenders work on the basis of mortgage payments of up to 120% of current rent, with 40-year terms and borrowing at up to five times income.
Foxtons says developers are adopting these products across London as they look to broaden the pool of potential buyers and convert rental demand into new-build sales.
A spokesperson for the agency says “The partnership between developers and lenders is opening the door for a new generation of London homeowners.
“For many renters, saving for a deposit has been the single biggest obstacle to buying, despite a consistent history of paying rent that often matches or exceeds potential mortgage repayments.
“No-deposit mortgages acknowledge that reliability, allowing renters to redirect what they’re already spending into a home of their own.
“For developers, who are also offering support with deposits of up to 5%, it’s a fantastic way to expand their pool of potential buyers and help more Londoners realise their ambition of home ownership.
“With these products now available across both new-build houses and flats, there’s a real opportunity for renters to take that step onto the ladder sooner than they might have thought possible.”
This article is taken from Landlord Today