Having subscriptions to Netflix and Spotify might help aspiring homeowners get on the property ladder thanks to a new mortgage concept.
Leeds Building Society has connected to Experian’s free Experian Boost service and the practice will help the potential borrower by showing lenders that their ability to pay for the subscriptions can prove, in a small way, their financial track record.
The move comes as Skipton Building Society, another Yorkshire bank, has announced it has launched a mortgage that does not require a deposit.
For the Leeds plan, mortgage meetings will consider factors of the applicant’s history such as the previous 12 months of regular debit payments which can include council tax but also Netflix and Spotify. This can connect witch the Leeds’s lending systems.
Richard Fearon, chief executive at Leeds Building Society, said: “This will particularly help younger borrowers, first-time buyers and anyone on lower incomes who face the toughest challenge to prove their ability to repay.
“Often through no fault of their own, these groups can struggle to build a good credit score because they need to spend most of their earnings on rent and other regular payments.
Aside from a credit score, there are other factors considered by lenders when assessing an individual’s mortgage application, such as their income, employment status, and overall financial stability.
Banks are needing to find new ways to attract new interest to buying property with housing at its least affordable point since 1875 amid a UK housing crisis.
Skipton said its scheme was also aimed at renters and would help those it said are trapped in a position of not being able to buy.
The building society is introducing the Track Record Mortgage on a five-year fixed rate at 5.49 per cent and a maximum mortgage term of 35 years. It is only open to first time buyers.
Charlotte Harrison of Skipton said: “We recognise there’s a clear gap in the market for people who have a strong history of making rental payments over a period of time so can evidence affordability of a mortgage – but there is currently no solution for them to buy a property due to lack of savings or access to family wealth.
“It is time for a re-think on these massive barriers to home ownership, and we’re proud to take the lead on bringing to the market, solutions for such a massive social problem.”
