What is Track Record Mortgage And How Does It Work?
The deposit has long been one of the most significant barriers to entry for first-time buyers in the UK property market. How often do you find that your customers have to put off looking for their dream house to save up a five-figure amount for a deposit? Or how usually do they regrettably choose to avoid the savings process? Your customers who are now renting will be able to quickly move into home ownership with the introduction of the Track Record mortgage, as they won’t need to give up a significant amount of their funds for the down payment.
The main advantage of this kind of mortgage is that renters who want to become first-time home buyers can concentrate on setting aside money for emergencies and saving money to help with bill payments. Keep reading to find out all the specifics of this unusual mortgage solution, including how it works and which UK lenders provide such a policy, in case you believe it will improve your proposal.
What is a Track Record Mortgage?
A track record mortgage allows renters to buy their own homes without paying the deposit that would often be required from the buyer. This kind of mortgage also doesn’t need a guarantor, which makes it a more accessible choice for tenants. Instead of a deposit or guarantor, the renter must provide evidence that they have been able to make monthly payments on time for at least 12 months out of the previous 18 months.
The mortgage is based on the applicant’s past “track record” of fulfilling rent obligations because it is believed that this will better determine their ability to make repayments than a deposit or guarantor.
In addition to supplying documentation of previous rental payments, a customer must fulfill several requirements to qualify for a Track Record mortgage. For an applicant to arrange this kind of mortgage effectively, policy purchasers need to:
- Be at least 21 years old.
- Have invested the last twelve months renting a house.
- It has not owned a property in the UK or overseas in the last three years.
- You have not missed any credit or debit payments in the preceding six months. Do not set up a loan bigger than £600,000.
Also Read: What is Mortgage – A Beginner’s Guide?
How Does Track Record Mortgage Work?
However, with such strict admission requirements, it surely will only fit some; renters across the UK are sure to find appeal in the promise of buying a property without having to scrabble to save money for the deposit. If you believe a customer could benefit from having one arranged on their behalf, you must understand the process of a track record mortgage.
Once set up, Track Record mortgages work similarly to a 5-year fixed rate mortgage because your customer will only be required to repay a set amount for the duration of the loan. If your customers were set on a lengthier mortgage policy for any reason, it is also essential to let them know that the maximum mortgage term is 35 years.
The benefit that sets track record mortgages apart is the waiver of deposits, contingent upon the borrower’s capacity to prove to the lender that they can manage their other financial responsibilities and make timely rent payments. To boost a buyer’s equity in a home purchased with this kind of mortgage, customers may still save money for a deposit; however, the deposit is limited to 5% of the home’s total cost.
How to Set Up a Track Record Mortgage:
Considering the continued preference of brokers and the UK public for regular fixed-rate and variable-rate mortgages, track-record mortgages do not constitute a sizable portion of the market. It can be due to the requirements that applicants must meet to qualify for this kind of coverage, and many mortgage brokers do not know how it works. This is the reason why not many lenders provide this kind of coverage.
Also Read: 5 Advantages of Using a Professional Residential Mortgage Broker
Conclusion:
Track Record Mortgages are tailored for individuals with a consistent financial history, offering competitive rates based on proven reliability. They evaluate factors such as steady employment, regular income, and timely repayments of previous debts. Understanding the intricacies of these mortgages can significantly benefit potential borrowers by enabling access to favourable terms and conditions. Mountview Financial Solutions simplifies this process by providing expert advice, thorough financial assessments, and personalised mortgage solutions. Their comprehensive support ensures clients can confidently navigate the mortgage landscape, securing the best possible deal tailored to their unique financial situation.
