Skipton Building Society is launching a low-rate mortgage range to help existing borrowers at risk of payment difficulties.
The product will offer existing owner-occupied Skipton borrowers coming to the end of their current deal and who would find themselves to be financially stretched on current rates, the chance to bridge payments by maintaining a low interest rate for two years.
The lender said that over half of its borrowers selected mortgages with a fee to keep monthly payments low, so the bespoke range has a fee of 5% of the existing loan amount.
This can be added onto the full mortgage amount in return for a low interest rate. This allows the cost of switching to be spread out.
At 60 per cent loan to value (LTV), the rate stands at 3.35%; 3.39 per cent at 75% LTV; 3.49 per cent at 85% LTV; and 3.59 per cent at 90% LTV.
Skipton Building Society added that strong house price growth over the last few years means borrowers fall into a lower loan to value (LTV) bracket than expected.
The range will allow borrowers in need of “greater financial support” to leverage their equity to support them over the two-year period by offsetting a high upfront fee with a lower interest rate.
Skipton: ‘Crucial to support borrowers’
Skipton’s CEO of home finance, Charlotte Harrison, said: “It’s crucial that lenders offer as much support as we can to ensure borrowers remain secure in their own homes through these turbulent times, by looking at further opportunities to provide certainty and confidence in the ability to maintain payments.
“Signing the Mortgage Charter was just one step in us providing support, but we feel we can do more for our borrowers. It’s important we think differently on what further support could be provided to make a real difference for our members who may be facing a future of financial difficulty due to the limited options on the market available to them.”
The agreements within the Mortgage Charter include allowing borrowers to contact their lender for help without impacting their credit file and enabling borrowers who are up to date with payments to switch to a new mortgage when their fixed term ends without another affordability check. Borrowers can also request a better like-for-like deal before their term ends if one becomes available.
Harrison continued that borrowers have benefitted from strong house price growth over the last few years, earning them additional equity in their properties, and those who are financially stretched can use this equity to “work for them”.
Harrison said that the range of mortgages “presents another option for our members” but said that it may not be right for everyone.
She added: “We really encourage all homeowners to be aware of what help is available from their lenders. If they’re worried they’re going to get into financial difficultly, they need to reach out to their lender. The sooner a person gets into contact with their lender, the more options they have available to them to help tackle the problem early.”