Saffron announces 95% first time buyer mortgage

Saffron Building Society announces the launch of a new 95% mortgage for first time buyers who have been renting for 12 months or more.

The ‘Rent to Buy’ Mortgage will use the prospective buyer’s rental payment history as evidence of their ability to afford an equivalent monthly mortgage payment and will combine this assessment with the standard credit history checks.

The repayment only mortgage is available direct from Saffron’s branches and by phone and via broker John Charcol. It has a rate of 6.49% which is fixed until 30th April 2015.

Research recently conducted by Saffron shows that one in five (21%) of those currently renting privately would like to take a fixed rate mortgage as they believe rates will rise soon compared to only 9% who would like to take a tracker or standard variable rate mortgage.

By distributing the mortgage both direct and via John Charcol, it is Saffron’s hope that more people will be able to take their first steps on to the property ladder. The mortgage is available with a £195 fee although Saffron is currently waiving this fee until 31 July for those who apply direct and live in its branch catchment areas.

John Eastgate, Saffron’s Sales and Marketing Director said: “With high rental costs and high inflation, many prospective first time buyers are simply not able to save the substantial deposits required of many current mortgages. We know that there are many potential first time borrowers who are capable of supporting a mortgage as they have been paying these amounts already in rent but are ‘frozen out’ of the market by the large deposits required.

“Some prospective first time buyers also face the barrier of developing a credit history to pass the automated credit scoring processes used by some lenders. Our manual underwriting looks at each case individually to assess the affordability of the mortgage for the applicant, making it highly suitable for first time buyers.”

Ray Boulger, John Charcol Senior Technical Manager, said: “The common sense way affordability is calculated for this mortgage builds on Saffron’s excellent underwriting skills and will be a breath of fresh air to any first time buyers with a 5% deposit who has suffered from the “computer says no” approach adopted by too many of the major lenders. As an indication of purchasing power someone paying £1,000 a month in rent with a 5% deposit would be able to buy a property for up to £155,000 with this mortgage.”