Skipton Building Society said this will allow first-time buyers to settle into their new home, giving them “breathing room” and allowing them to manage the extra costs associated with buying and moving into a property.
The deal is available up to 95% loan to value (LTV) and interest will accrue from day one and be added to the overall mortgage balance.
The deal is available exclusively to first-time buyers, with at least one applicant needing to be a first-time buyer, and works with Skipton Building Society’s Income Boost.
Its two- and five-year fixed rates at 90% LTV are 4.87% and 4.78%, while its two- and five-year fixed rates at 95% LTV are 5.2% and 5%.
There are also new-build iterations, with its two- and five-year fixed rates at 95% LTV coming to 5.4% and 5.2%.
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Research from Skipton into 1,000 UK adults who bought their first house in the last five years found that first-time buyers are spending upwards of £30,000 in the first three months of moving into their new home.
Around 63% of first-time buyers felt financially strained in those first three months, with 71% saying the entire moving process cost a lot more than they expected.
Research from the mutual suggests that first-time buyers spend an average of £3,500 on furniture, £2,600 on kitchen appliances and £1,700 on removal companies.
More than a third would be juggling costs for two properties due to overlapping rental agreements, 43% find it difficult to line up their move with the end of their lease and 26% blame delays in the buying process.
Jen Lloyd, head of mortgage products at Skipton, said: “Becoming a homeowner should be one of the most exciting milestones in someone’s life. However, our research shows that first-time buyers are struggling and feel the cost associated with the move takes the shine off getting onto the property ladder.
“That’s why today I am pleased to announce the launch of Skipton Delayed Start mortgage, giving first time buyers some breathing space with no mortgage repayments due for the first three months.
“We hope that this product will help first-time buyers settle into their new home and help ease the strain of the costs that come with buying [a] first home that go beyond the deposit. At Skipton, we believe in fairness, that’s exactly why we’ve launched our new Delayed Start Mortgage – to give first-time buyers a fair start in their new home, and the breathing space they need in those critical first few months.”
Andrew Montlake, CEO of Coreco, said: “Yet again, Skipton have delivered some innovation into the market backed by some careful research into what would most help first-time buyers. Delaying payments for three months can help take the pressure off in the early days when settling in and making a house a home is a top priority.
“Of course, this product will not suit everyone, and professional advice should be taken to fully understand the product, but it is yet another welcome option available to homebuyers that gives them choice.
“We need more lenders to look at what a new generation of borrowers really need to get onto the housing ladder and any innovation should be welcomed into the market.”
Another example of product innovation is Skipton Building Society’s Track Record mortgage from 2023. Its no-deposit requirement and inclusion of rental history has led to nearly £200m in applications and £111m in completions.
