A one-of-a-kind mortgage offering a major financial perk – no repayments for the first three months – has been launched in the UK.
The deal, unveiled by Skipton Building Society, is the latest innovation aimed at cash-strapped first-time buyers and is designed to provide them with a bit of breathing space as they settle into their new property.
However, while the new Delayed Start mortgage should help ease the strain of the costs that come with buying a first home, those first three months are not free. Interest will start to accumulate from day one and will be added to the overall mortgage balance – so some may view this as something akin to “buy now, pay later” for mortgages.
Skipton said the new product was exclusively for first-time buyers and available to those borrowing up to 95% of a property’s value.
It said its survey of people who had bought their first house in the last five years found that first-time buyers were spending upwards of £30,000 during the first three months of moving in. This was causing almost two-thirds of them to feel “financially strained” during that period, with many saying that the entire moving process “cost a lot more than they expected”.
A spokesperson for Skipton said the new product “will enable first-time buyers to settle into their new home with no mortgage repayments due for the first three months, allowing them to manage the extra costs associated with buying and moving into their first property”.
David Hollingworth at the broker firm L&C Mortgages said this deal would allow people to “regain a bit of stability” before their mortgage payments kicked in. But the interest will be added on, so this could be seen as “more like a payment holiday”. Those taking advantage of the deal will have a slightly bigger mortgage, and it “will therefore cost you more”.
This is the latest in a line of deals aimed at making it easier for first-timers to get on to the property ladder. In 2014, Leeds building society launched some mortgages with credit card-style “0%” introductory interest rates, although customers still had to pay off the capital during the first few months and the interest they did not pay at the beginning was added into the later payments.
More recently – in 2023 – Skipton launched a deal allowing people who are renting to borrow 100% of the property’s value.
