Martin Lewis gives cautious verdict on first 100% mortgage in 15 years

Applicants for the mortgage will have to meet strict conditions but could help people struggling to get on the property ladder

Britain’s first no-deposit mortgage since 2008 could be a sensible option for renters struggling to save, according to Martin Lewis.

Skipton Building Society is now offering a 100 per cent mortgage which lets people purchase a house on a five-year fixed rate mortgage without putting down any money up front.

The mortgage will be available to first-time buyers who are 21 years-old or above, who have paid all rent and other household bills in full and on time for 12 months, and who aren’t looking for a new-build flat.

The catch is that you can only borrow the equivalent of, or less than, what you pay on rent each month.

For most mortgages, the maximum amount that you can borrow is typically your salary times four and a half.

The average first-time buyer property costs £238,000. Under Skipton’s scheme, you would need to be paying £1,300 a month in rent to qualify for a mortgage of this size. The maximum amount that can be borrowed is set at £600,000.

The rate on the mortgage offered by Skipton is set at 5.49 per cent and comes with no fees, unlike most mortgages.

The best rate offered on a 5 per cent deposit mortgage is currently 4.6 per cent, plus a £300 fee. For a £300,000 mortgage this adds up to a yearly cost of £19,292.

The money saving expert (Getty Images)

A Skipton mortgage on a property of the same price would have a yearly cost of £22,080.

Like most fixed-rate mortgages, Skipton's 100 per cent mortgage allows overpayments of up to 10 per cent a year.

Money saving expert Mr Lewis said: “I've campaigned for years to try and help mortgage prisoners locked in at hideous unaffordable rates, and the spectre of 100% mortgages returning leaves me with mixed feelings.

“Years of property-porn TV shows have spouted the idea that you must buy a house as soon as possible, as big as possible – actually, the real priority is not to overstretch your finances.

“Before the 2007 financial crash, banks would simply throw mortgage loans out to anyone walking past a branch window; now we need to be more careful.

“So Skipton Building Society's criteria of requiring a good rental track record to prove someone can make mortgage payments is sensible, and so I cautiously welcome it, done carefully, after advice, as an option for some.”