Cash-strapped homebuyers lifeline with delayed mortgage - but experts have a warning

Skipton Building Society has introduced a new mortgage deal aimed at giving first-time buyers a leg up onto the property ladder by allowing new homeowners to delay mortgage repayments for the initial three months. However, there's a potential pitfall that might not be immediately apparent to many first-time buyers.

Although no repayments are required during these first three months, this period isn't completely cost-free. Jonathan Bone, Head of Mortgages at Better.co.uk, warns: "While you might think, 'Great! I don't have to pay my mortgage and get myself and my home kitted out', because you're getting a few 'free months' off; the reality is that those 'non-payments' are likely to be added as interest to your mortgage. This means that when you do actually start making your mortgage payments after the end of the grace period, your repayments may end up being higher than you initially expected.

"Or your mortgage term may be longer than you originally planned, meaning you pay more over time. While these deals are a fantastic and innovative way to help aspiring homeowners, they aren't for everyone."

Essentially, it's a postponement of payments rather than eliminating these costs entirely.

The expert commended the "innovative" nature of the product, noting: "Delaying payments can help take the pressure off that a lot of buyers feel when they move and really make a difference in those first few months."

Nonetheless, he cautioned prospective buyers to consider several important factors before committing.

He advised: "It's important that you consider whether you will be able to comfortably make higher repayments after that holiday period; if not, then you could be stretching your budget thin for years as you try to pay back the added expense."

He also warned of possible long-term repercussions of a delayed start mortgage: "While you shouldn't be directly penalised for opting for this product, lenders who perform affordability checks in the future, such as when you are remortgaging, may view this choice as a sign of financial precarity."

Furthermore, choosing this type of mortgage might restrict your options for future deals, like when remortgaging, because it raises your loan-to-value ratio, which lenders often interpret as a higher risk.

When applying for products such as a delayed start mortgage, your credit history might face closer examination. Moreover, an expert stresses the importance of budgeting carefully and accurately calculating affordability to ensure that you can meet monthly payments "even in difficult periods".