Latest news with #100percentmortgage
The Independent
16-05-2025
- Business
- The Independent
New 100% mortgage launched for buyers with no deposit
Homebuyers have been given the chance to purchase a property without a deposit after a lender announced it will start offering a 100 per cent mortgage. April Mortgages is offering the deal to UK residents who earn at least £24,000 income (including as a household) and are looking to buy or remortgage a house that's valued at more than £75,000. Borrowers must lock in their interest rate – starting at 5.99 per cent and automatically decreasing as they pay down the mortgage – for a fixed term of 10 or 15 years. Such products were more commonplace and were popular before the financial crash in 2008 but have become The deal, which has been described as a 'game changer', is typical of the type of mortgage products that were available before the 2008 financial crash, but have now largely disappeared. What it means for buyers April's decision to add a 100 per cent mortgage option is a boost in terms of options for those who struggle to get a sizeable deposit together, but there are of course drawbacks. Newbuilds and flats are not available for the deal, but there are no fees for overpayments and the interest rate payable on the loan will also reduce as more of the total amount owed comes down. However, as the loan to value (LTV) rate is higher, so too is the interest rate payable when compared to 'normal' deals on the market, with April Mortgages' deal starting from 5.99 per cent. April is not the only company offering 100 per cent mortgages: Skipton has had a 'Track Record' offering for two years which offers those who have rented the chance to get on the property ladder, while Accord mortgages offer a £5,000 deposit mortgage for up to 99 per cent LTV. It's also important for buyers to note other fees they may have to pay. Stamp duty, legal costs, broker's fees and other costs - including changing interest rates at the end of fixed terms - should all be considered. Pros and cons The biggest concern for individual buyers can be falling property prices. If you take a 100 per cent mortgage and the property value decreases over the next few years, the owner will have negative equity - in other words, they will owe more than the house is worth. If they need to sell, they may end up having to find more money to pay off a property that they initially put no deposit down on. David Hollingworth, associate director at L&C Mortgages explained the big consideration for borrowers before taking on such a decision - and why April's rules on the product might prove beneficial. 'We know that borrowers struggle to pull together the big deposits that are so often required to buy in the current market. April's new deal will add another option to those that have strong affordability but can't amass a deposit, whilst meeting high rents and living costs,' he said. 'Borrowers will need to evidence their ability to meet mortgage payments. In addition, they should think about the higher potential for negative equity if property prices were to fall. 'Negative equity becomes a problem for those that need to sell, crystallising any loss. The stability of a fixed rate will provide shelter from fluctuating interest rates, which could help them ride out a dip in prices.' Another factor is that interest rates on mortgages can be significantly different if buyers are even able to raise a small deposit - last month's rates showed that a five per cent deposit on a £200,000 house would be mean repayment terms were £3,500 cheaper to pay over a five-year period. With the UK government prioritising housebuilding and getting people on the property ladder, a succession of changes have happened this year in the mortgage market. One key issue has been the battle for remortgaging clients, with interest rates dropping this year. Barclays recently announced their lowest rate of the year at 3.85 per cent, MPowered Mortgages have cut three-year fixed rate mortgages to 3.88 per cent and Nationwide are starting from 3.84 per cent for both new and existing customers. Nationwide has also become the latest company to reduce their stress test rates, meaning lenders could borrow up to £28,000 more than previously. Santander did likewise last month, while Skipton recently brought out a mortgage product with no repayments for the first three months.
The Sun
16-05-2025
- Business
- The Sun
Major lender launches no deposit mortgage that is ‘life-changing' for first-time buyers
A LENDER has launched a new 100% mortgage which would allow people to buy a home without a deposit. The new deal from April Mortgages is aimed at helping out first-time buyers or home movers who can afford to make monthly mortgage repayments but are struggling to stump up a deposit. 1 They would need to have a household income of at least £24,000 and be looking to buy or remortgage a house that's valued at more than £75,000. The mortgage deal is available on 10 and 15-year fixed terms, so buyers would need to be happy to lock in for a long period of time. However there are no early repayment charges if you decide to move home or if you repay the mortgage in full. A 100% mortgage means that you are borrowing the full amount of the property you are buying. So if the property costs £250,000 then you are borrowing the full £250,000. Most lenders will insist on a deposit of at least 5 to 10% when you're applying for a mortgage. But high rents and the cost of living crisis have made it more difficult for first-time buyers to save up for a deposit - especially as, according to Halifax, the average deposit for a house in the UK is now more than £60,000. In London this climbs to £100,000. James Pagan, director of product at April Mortgages, said saving for a deposit is one of the biggest barriers to home ownership. He said the new mortgage deal is a "responsible option for borrowers with strong financial track records who are excluded by traditional deposit requirements". Mortgage Rates Evergreen The April Mortgages product allows people to borrow up to 4.49 times their income. It allows unlimited overpayments at any time, so homeowners can pay off more of their mortgage if they want and build equity in their home. Few lenders currently offer 100% mortgages, although there is a similar one from Skipton Building Society. High street lenders such as HSBC and Lloyds had been offering 100% mortgages before the 2008 financial crash, but these were wiped out when lending rules tightened. It then became more difficult to be approved for a mortgage and major lenders have since required bigger deposits from borrowers. More recently lenders have been making moves to make things easier for first-time buyers to get on the ladder. For example, Accord offers a £5,000 deposit mortgage and other lenders have been slashing their affordability rules to allow people to borrow more. Why you should be cautious with 100% deposit mortgages These types of mortgages can open doors for people who wouldn't be able to get on the housing ladder otherwise. Experts have generally seen the reintroduction of 100% mortgages as a positive thing and this deal from April Mortgages does have rigid lending criteria. But it's important to remember this deal won't be for everyone and they can be seen as quite controversial home loans. 100% mortgages mean you don't need a deposit - but it also puts buyers at higher risk of negative equity. This is when your mortgage is more than the total value of your home, which can happen if house prices fall. If you're in this position it can make it harder to remortgage, sell your home and get competitive rates from lenders. Typically they also have higher interest rates, making them more expensive. The general rule is that the smaller your deposit the higher your monthly mortgage repayments will be. Therefore because you won't have a deposit, your monthly repayments are likely to be more expensive compared with someone who did put down a deposit. You will need to be sure you can keep up with the payments and account for any potential financial shocks. 100% mortgages disappeared after the financial crisis in 2008, as they were seen a contributor to the sub-prime housing bubble and subsequent collapse. Nick Mendes, mortgage technical manager at John Charcol, says the new 100% mortgage comes at a "crucial time for the market". "What really stands out is the flexibility built into the product. Removing early repayment charges when moving home or making overpayments gives borrowers freedom and control, which is often missing from traditional longer-term fixes," he said. "It is a smart, well-structured product that addresses today's affordability challenges head-on and will undoubtedly help more people take that first step onto the property ladder with confidence." Kate Fuller, business principle at Mortgage Advice Bureau, said: "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."
Daily Mail
16-05-2025
- Business
- Daily Mail
Home buyers offered 100% mortgage: Who can get it and is it a good idea?
Home buyers are being offered the chance to purchase a home with no deposit, as a little-known lender has launched a 100 per cent mortgage deal. It is being offered by lender April Mortgages - the same lender that offers up to seven times annual income on some mortgages. Buyers who want to take advantage of its new no-deposit product, however, will be limited to borrowing no more than 4.49 their annual income. This means someone earning £40,000 a year could hypothetically buy a home worth £179,600 even without any savings. However, they will need to be able to make the mortgage repayments - which will be higher than if they had put down a deposit. They will also need some cash to pay for legal fees, a surveyor and stamp duty, if their purchase incurs it. April also requires a minimum income of £24,000 to get the 100 per cent mortgage, and borrowers will also need to fix for either 10 years or 15 years - much longer than the normal two or five year products most people sign up to. What is the interest rate on a 100% mortgage? The interest rate initially starts at 5.99 per cent. On a £200,000 mortgage being repaid over a 25 year term that would mean paying £1,288 per month. To put that in perspective, someone putting down a 5 per cent deposit could get a rate as low a 4.79 per cent, with Nationwide Building Society. They would only need to fix for five years, though the deal comes with a £999 fee. On a £200,000 mortgage being repaid over a 25 year term that would amount to £1,145 a month. April has tried to make its higher rate more attractive by offering an automatic rate reduction over time, as people pay down the debt and the loan-to-value reduces. It says there are no early repayment charges when moving home or repaying in full using personal funds. However, borrowers will be subjected to an early repayment charge if they switch to a different lender during the fixed term period. James Pagan, director of product at April Mortgages, said the no-deposit deal was designed for credit-worthy buyers who can clearly afford monthly repayments but lack access to upfront capital – particularly those without help from the Bank of Mum and Dad. He said: '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. 'Our new no deposit mortgage brings together full credit and affordability checks with the longer-term certainty of a 10 or 15-year fixed rate. 'It's a responsible option for borrowers with strong financial track records who are excluded by traditional deposit requirements.' However, borrowers should think carefully about taking this kind of mortgage, and whether biding their time to save even a small deposit could save them more money and give them greater security in the long run. David Hollingworth, associate director at the broker L&C Mortgages said: 'Borrowers will need to evidence their ability to meet mortgage payments. 'In addition, they should think about the higher potential for negative equity if property prices were to fall. 'Negative equity becomes a problem for those that need to sell, crystallising any loss. The stability of a fixed rate will provide shelter from fluctuating interest rates, which could help them ride out a dip in prices.' However, for some mortgage experts, zero-deposit lending brings back memories of looser mortgage lending practices which led to shocks for some homeowners during the financial crisis. Emma Jones, managing director at specialist mortgage broker When The Bank Says No told the news agency, Newspage: 'We have to sit back and reflect on what's happening at the moment. 'Lenders are lending more and the Government is encouraging regulators to let them lend more. 'Those who experienced the global financial crisis might be wondering whether history will soon repeat itself.' What are the alternatives? There are some other small or no-deposit deals currently on the market. However, most require either a guarantor, some form of collateral security (for example from a parent's property) or a cash deposit to be held with the lender for a period of time. For example, Halifax's Family Boost mortgage allows a family member to put 10 per cent of a home's purchase price into a three-year fixed savings account as security, which allows the borrower to get a three-year fixed rate mortgage with no deposit. They get their savings back, with interest, when the three-year term ends, as long as repayments are up to date. Only the first-time buyer has their name on the mortgage and they legally own the property. Yorkshire Building Society's Accord Mortgages, also has a mortgage that can offer up to 99 per cent of the purchase price. This mortgage requires a minimum £5,000 deposit and is available on properties up to £500,000. That could equate to as little as 1 per cent of the purchase price. It is only available on houses, not flats, and excludes new build properties. At least one applicant must be a first-time buyer. The new no deposit option from April Mortgages avoids the need for any family help. Mortgage brokers think this could prompt other lenders to start offering similar products - and perhaps even offering more than the purchase price. This was common pre-financial crisis, often pitched as a way to allow first-time buyers to borrow the cash to buy things such as furniture and kitchen appliances, alongside their mortgage. Riz Malik, Director at R3 Wealth, said: 'There will be more lenders entering the 100 per cent loan-to-value bracket as the housing market continues to show resilience. 'Lenders want to lend and they will find new or old ways to do that. You could be forgiven for thinking we are back in the early 2000s. Will there be a lender offering over 100 per cent by the end of the year?' Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
Times
15-05-2025
- Business
- Times
New 100% mortgage deal launches in UK
Homebuyers will be able to get a 100 per cent mortgage tomorrow, in one of the first deals of its kind since the financial crisis. April Mortgages is releasing the deal, which will require borrowers to fix their interest rate — starting at 5.99 per cent — for 10 or 15 years. 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. April Mortgages said fixing the rate for a decade or more would reduce the risk of negative equity, where the value of a property falls to less than the loan taken out against it. The lender, a Dutch-owned company, offered its first mortgages to British buyers last year.
