First-time buyers can now use their NETFLIX direct debit to help them get a mortgage

Keeping track of monthly costs for Netflix or Spotify could now help aspiring homeowners get up the housing ladder, as one mortgage bank will allow customers to use regular direct debits to help prove they can afford a mortgage.

Leeds Building Society allows prospective home buyers to factor in their last 12 months of direct debits as part of affordability checks.

It means that payments to subscription services, as well as other regular obligations such as council tax or a gym membership, are counted towards their credit score and can be used as additional evidence of a good financial record.

Other factors that lenders consider when evaluating a mortgage application include income, employment status and overall financial stability.

> Read our guide to getting your first mortgage and climbing the real estate ladder

Leeds BS offers the service – known as ‘Experian Boost’ – as part of a partnership with credit bureau Experian.

Borrowers must agree to share their financial information through open banking in order for payments to be counted.

The information is shared with Experian via a secure connection and is then connected to Leeds lending systems where it can be viewed by mortgage advisers.

At the moment, only those who only apply for a mortgage can use the service. Leeds BS said joint applicants could soon use these ‘boost scores’.

The additional information provided may tip the scales in favor of some borrowers who may otherwise have been rejected.

However, proof of regular direct debits will not improve everyone’s ability to get a mortgage.

Leeds Building Society said when it tested the tool, 7.5 percent of applicants reported an improvement in their credit score using Experian Boost.

David Hollingworth of broker L&C Mortgages said: ‘New buyers face so many challenges when trying to buy that it’s encouraging to see lenders looking for ways to remove some of the hurdles. If saving a down payment and being able to borrow enough to cover the high home prices wasn’t enough, many will worry that their credit record will be too meager to meet the lender’s demands.

“Being able to draw on the track record of managing regular payments over time could help boost credit score and can only help make you more eligible for a mortgage.

Anyone concerned about their ability to meet the lender’s criteria should also seek advice that will help them find the right lender for individual circumstances.

“With more products looking to help first-time buyers get a foothold in the market, they may find there are more options than they feared.”

Leeds isn’t the only lender this week to unveil an innovative way to potentially accelerate some first-time buyers’ home ownership dreams.

On Tuesday, Skipton Building Society announced a new zero-deposit mortgage deal aimed at first-time tenants.

Skipton said renters age 21 and older may be able to take out mortgages at 95 percent to 100 percent of the value of the property they want to buy.

In return, they must be able to demonstrate a strong record of paying their rent, with proof of a minimum of 12 months of rental history, as well as passing affordability and credit checks.

The Skipton track record mortgage is a five year fixed rate product with an interest rate of 5.49 per cent, and the maximum term of the mortgage is 35 years.

Leeds offers mortgages of up to 95 percent of a home’s value, both for outright purchase and shared ownership mortgages, for which applications also qualify for enhanced credit scores.

Up the ladder: Leeds has said the new service, offered by credit bureau Experian, could be particularly useful for young tenants who may struggle to prove they can afford a mortgage

Richard Fearon, CEO of Leeds Building Society, said: ‘This will particularly help younger borrowers, first-time buyers and anyone on lower incomes who face the biggest challenge in proving their ability to pay back.

“Often through no fault of their own, these groups can struggle to build good credit scores because they have to spend most of their income on rent and other regular payments.”

He said the majority of those who have applied to Experian Boost to date have been renters.

Sigga Sigurdardottir, managing director, consumer services at Experian, added: ‘As many people in the UK face barriers to home ownership, we are delighted that

“Boost users can now use their boosted scores to help them up the ladder, making that homeownership dream more accessible to people across the UK.”

Not all credit scores will increase with Boost, but it will never cause a credit score to drop, according to the promoters.

Leeds Building Society said customers can opt in and out of the Boost service at any time.