April Mortgages has launched a 100% mortgage – one of the first deals of its kind since the global financial crisis.
The mortgage will be available to first-time buyers and house movers with a household income of at least £24,000 and will not require a deposit.
The No Deposit Mortgage is available on 10- and 15-year fixed terms and is aimed particularly at tenants struggling to save while renting.
April says the product is in response to high house prices, rising rents, and unstable inflation which have ‘trapped’ tenants.
Interest rates start from 5.99%, with borrowers eligible for automatic rate reductions as their loan-to-value ratio falls over time.
James Pagan, director of product at April Mortgages, says: “Saving for a deposit remains one of the biggest barriers to home ownership, even for those with strong incomes and a solid credit profile. We believe the answer lies not in loosening standards, but in designing products that better reflect the realities of today’s housing market.”
The No Deposit Mortgage includes no early repayment charges for borrowers who move or repay the loan from personal funds, as well as unlimited overpayments. Loans of up to 4.49 times income are permitted, subject to normal affordability and credit checks.
Rachael Hunnisett, director of mortgage distribution at April Mortgages, added: “The housing market has shifted dramatically. Wage growth struggles to compete with rising house prices, and owning a home has become harder to achieve, even for those with steady incomes … We’re committed to making mortgages simpler, more flexible, and better suited to the way people live today.”
The product has been widely welcomed.
Kate Fuller, business principle at Mortgage Advice Bureau, says: “We haven’t seen 100% mortgages like this since 2008, so to see them finally return really shows how much positivity there is in the property market right now.”
David Hollingworth, associate director at L&C Mortgages, believes the initiative “could bring renewed hope” to tenants finding it difficult to raise a deposit.
Last month, April launched enhanced loan-to-income criteria meaning it can lend up to seven times a borrower’s income.
Most lenders typically offer mortgages for sums which are 4.5 times borrowers’ incomes although Nationwide recently extended that to six times income.
The increased borrowing from April is available to applicants with a household income of £50,000 or more, offering up to 85% loan-to-value.
