Skipton’s new deposit-free mortgage also comes with some snags. Zoopla’s research has shown that the product is only really suitable for people in areas with low real estate prices and for people with higher salaries.
There is also an increased risk of negative equity when a borrower has more debt on their mortgage than their home is worth. This is a particular risk when real estate prices fall.
Leeds’ collaboration with Experian uses Open Banking to link a borrower’s current account payments to their creditworthiness. This data is then passed through Leeds’ credit systems before a mortgage is offered.
Currently, only single applicants can use their subscriptions to improve their credit score, but there are plans to roll it out soon for couples who want to buy together.
The lender said the new criteria would not improve each person’s credit rating, but “never cause credit ratings to go down.”
In the past, realtors have warned clients not to take out many subscriptions when trying to save for a home deposit — they should beware that anything that could eat into their income could work against them.
“The inclusion of regular payments like Netflix is certainly something that’s never been done before,” said James Tucker, chief executive of mortgage tech company Twenty7tec.
“Traditionally, some lenders have disregarded ‘non-essential’ costs, limiting mortgage seekers’ ability to borrow.”
But now they’re being used to demonstrate responsible, regular payments.
Mr Tucker said his company’s data showed demand for new types of mortgage products “really is there”.
