Checked by Connor Fitzgerald, Founding Director
If you’ve been renting in the UK and watching house prices climb higher each year, you’re probably wondering how on earth you’ll ever save for a deposit. Well, the track record mortgage is a game-changing option that could finally make homeownership possible for thousands of renters.
In this comprehensive guide, we’ll break down exactly how track record mortgages work, who can apply, and the key advantages and drawbacks you need to know before taking the leap.
A track record mortgage is a 5 year fixed term mortgage where NO deposit is needed. This was designed specifically to help current renters over the age of 21 in the UK get onto the property ladder.
This ‘100% mortgage’ does not require a deposit or guarantor and is currently only available to those who are over the age of 21 and renting in the UK. The idea behind it is that as long as the buyer has a 12-18 month ‘track record’ of no missed or late rental or bill payments, then they will be approved for a mortgage, without having to save up for a deposit.
If you’re currently renting in the UK and struggling to save enough money to purchase your first home, then a track record mortgage could be the best mortgage solution for you, as long as you meet certain criteria, including:
*While you can’t purchase a new build flat with track record mortgages, you can purchase new build homes or other homes, as long as the valuation isn’t over £600,000.
For first time home buyers, who are struggling to get onto the property ladder with a traditional mortgage, a track record mortgage is a fantastic opportunity. However, as with all mortgage types it is important to understand how this particular mortgage works and whether it suits your needs.
The UK’s new track record mortgage works in much the same way as other fixed-rate mortgages, where your lender will loan you a sum of money to purchase your home, up to £600,000, this amount will then be paid back monthly, at a fixed interest rate.
However, unlike a traditional mortgage (where you save 10% or of the property price as a deposit) track record mortgages are designed to be used by those unable to save a deposit due to rental fees.
In this case, you will need to prove to your lender that you have a clean track record with your rental, debt and bill payments. Having a 100% fiscal track record is paramount when applying for the track record loan.
For more information about applying for a mortgage for the first time, see our blog post, “A guide: first-time buyer mortgage advice” or for further information about different mortgage types, see our blog post, ‘A complete guide to UK mortgage types’.
No matter what type of mortgage you settle for when buying your first home, moving home or remortgaging, it comes with a wide range of advantages and disadvantages, which you must always take into consideration during the application process. While this may sound slightly overwhelming, our team of expert mortgage advisors are on hand to help you understand all you need to know about this product designed to help first-time buyers break away from renting and owning their own home! Read more about our experience and some of our case studies to see how we’ve helped others in the past.
To find out more about mortgage rates and what you should know when applying for a mortgage, see our blog post: ‘10 mortgage FAQs answered by our Yeovil mortgage brokers.’
Track record mortgages will have a fixed interest rate, this may vary depending on the lender, however, Skipton Building Society, offer the current rate to be at 6.79%. Please note interest rates may vary and we recommend speaking to our advisor for a more definitive figure.
Early repayment charges (ERC) tend to apply to most mortgage types if you repay your mortgage early, including track record mortgages. ERCs can also be charged if you make an overpayment (anything that’s more than 10& of your annual payment allowance).
Charges may vary depending on your lender.
Yes, your track record mortgage is fixed for a minimum of five years, and your rate won’t change during these five years.
You can decide to opt out of your track record mortgage before the end of your fixed term, however, ERCs may be charged to you if you leave before the fixed end date.
Getting any mortgage after you’ve lived abroad for a matter of years can be difficult. Track record mortgages require you to have lived and paid rent in the UK for at least 12-18 months before application.
If you pay your rent in cash only, to apply for a track record mortgage, lenders may require a letter from a suitable lettings association or agent for proof of 12 months of rental payments.
As long as you can prove that you meet the lending criteria:
Then you should be eligible for a track record mortgage. However, we recommend getting in touch with one of our expert mortgage advisors for further information.
If you’re looking to buy for the first time with a friend, family member or partner, and have previously rented separate properties for over 12 months, you will be able to purchase a property together with the track record mortgage.
Similarly, if two individuals have been paying rent without the help of anyone else and meet all other criteria, they will be allowed to apply for a track record mortgage.
If you live on a military base and rent and bills are taken out of your monthly salary, you may be eligible. We recommend contacting our helpful team, who may be able to assist you further.
Have you been struggling to save up for a house deposit due to the fact that you’ve been renting? Are you over the age of 21 and looking to buy your first home? Our team of dedicated mortgage advisors would love to help you make that exciting move from renting to owning.
Now with the reintroduction of 100% mortgages from certified lenders, it could be easier than ever to get onto the property ladder.
Important information:
Because we always have your best interests at heart, you need to know that if you do not keep up with your mortgage repayments your home may be repossessed. A fee may be included for mortgage advice. Fees can be up to 1%, but typically a fee is 0.3% of the borrowed amount.
