A deposit free mortgage which allows first-time buyers and movers to borrow 100% of their property’s value has been launched by April Mortgages.
The deals can be taken out as 10- or 15-year fixed rates which start at 5.99% and automatically drop as more of the loan is paid off. It means over the years the repayments gradually decrease.
There are also no early repayment charges (ERCs) which means borrowers will not face penalties if they move or pay off the loan before the deal ends.
Borrowers can also make unlimited overpayments.
In return April Mortgages requires borrowers to have a steady income of at least £24,000 and a clean credit history.
The product has been welcomed by brokers despite the fact there is often much scepticism around 100% mortgages.
Since the financial crisis in 2008, no deposit mortgages have been considered highly risky as there is more chance of borrowers falling into negative equity.
As such there are few products of this kind on the market. Those which do offer 100% loans tend to require a guarantor.
However, with April’s product, the minimum term of 10 years is the key here because locking in for this length of time reduces the risks of negative equity.
There are other safeguards in place too. Borrowing is capped at £600,000 and applicants may only borrow 4.49 times their income.
Rachael Hunnisett, director of mortgage distribution at April Mortgages, said: “The housing market has shifted dramatically. Wage growth struggles to compete with rising house prices, owning a home has become harder to achieve — even for those with steady incomes.
“But having a place to call your own still brings security, stability, and the freedom to build a life — and that shouldn’t feel out of reach.
“At April, we’re committed to making mortgages simpler, more flexible, and better suited to the way people live today.”
100% mortgage: The verdict from our expert
Gemma Bennett is senior mortgage broker at The Mortgage Mum and also a what MORTGAGE columnist. Here she explains more about how April’s new 100% mortgage works….
“April Mortgages is a UK lender with Dutch origin and it is revolutionising the way lending is approached in the UK.
They have released 100% mortgages onto the market for first-time buyers and home movers with a £24,000 minimum income from employed or self-employed work.
They are offering 10 and 15-year fixed term with no ERCs.
They say from a Dutch perspective they feel we as English gamble so much with our mortgage. Never knowing the market conditions coming at remortgage and the lifetime of a mortgage.
They ask what would you be doing in your life if you had certainty over your mortgage payments long term? If you didn’t need to factor in any life decisions, or plan around the next remortgage?
But what if you decide to move home? With this mortgage don’t port but as there’s no ERCs, unless you are remortgaging to new lender. So, you just end that mortgage and get a new one on new property.
The rate moves with the loan-to-value (LTV), so you it reduces automatically as you pay more down. It means over the years your rate naturally decreases.
The key aspect here, which is refreshing, is April Mortgages really values holistic advice around this product. And for that reason they have selected a small handful of brokerages able to access the product, The Mortgage Mum is one of them – we have been hand-picked.
In my opinion it’s absolutely brilliant to see innovation and the although the headline 100% mortgage initially conjures up scepticism based on previous past models this is a brand new concept routed in certainty and responsible lending.
We are excited!”
