Latest news with #TrackRecord
Yahoo
3 hours ago
- Business
- Yahoo
UK mortgages: 100% loans are back – will they work for you?
Saving up for a deposit is one of the biggest challenges facing would-be homeowners, who can find that each month pretty much all most of their money is being swallowed up by rent and living costs. No-deposit deals – known as 100% mortgages – can provide a lifeline, and in recent months a new crop have come on to the market. But in return for not having to put down a deposit, you will have to pay a higher interest rate. Also the affordability rules and lending limits that apply on these loans mean they probably will not be an option for many buyers in pricier areas such as London or for some people considering a larger property. This type of mortgage is controversial, too, because homebuyers who take them out are particularly vulnerable to house price falls, as they have no equity to cushion them if there is a drop in the value of their home. Even a small fall in prices could leave some owing more on their mortgage than their home is worth. We have looked at the details of each of the no-deposit deals. We also explain how, if you can manage to save up a deposit – 5% is good, but 10% is better – this will give you access to more competitive rates and reduce your monthly outgoings. Standard home loans where the borrower does not have to put down a deposit used to be fairly common but disappeared after the 2007-08 financial crisis when lenders were concerned about the outlook for property prices. Two years ago, Skipton building society launched a 100% deal, called Track Record, aimed at people who are now renting, or were until very recently. Last month, two more lenders, April Mortgages and Gable Mortgages, launched their own no-deposit deals. It is very difficult to single out one 100% deal as 'the best' on the market, says Mark Harris, the chief executive of the mortgage broker SPF Private Clients. 'There are positives and potential drawbacks to every product. Every borrower's situation is different and therefore different outcomes will apply.' At the time of writing, Skipton's Track Record mortgage was offering the lowest interest rate. It's only available as a five-year fixed-rate loan, and you can choose from two rates – 5.29%, or 5.39% with £1,000 cashback. There is no fee. Track Record 'is ideal for renters with a proven history of paying on time', says Nicholas Mendes at the broker John Charcol. You need to show proof of having paid rent for at least 12 months in a row on a UK property (with no arrears) in the last 18 months, and have not owned a UK property in the last three years. Since its launch, Skipton has loosened its affordability rules a little so that 'in some circumstances' it will offer loans that have monthly repayments of up to 120% of the rent the customer has been paying. The maximum you can borrow is 4.49 times your annual income (for single and joint applicants), rising to 4.75 times if that income is more than £50,000. A cap of about 4.5 times income is fairly standard when UK lenders are assessing what people can afford, but it means some house-hunters in higher-priced areas will not be able to borrow enough to buy. The Skipton deal could allow a couple with a joint income of £55,000 to borrow up to £261,250. For those looking to borrow more than 4.5 times income, Gable may be able to help. Its 100% deals are potentially the ones that will allow buyers to borrow the most, says Mendes. The lender will let individual key workers borrow up to five times income. For couples who are both key workers, applicants can borrow up to 5.5 times. Gable's definition of key workers includes NHS clinicians (nurses, paramedics, doctors, etc), teachers and childcare providers, university lecturers, police officers and armed forces personnel. Gable offers two five-year fixed-rate mortgages aimed at first- and second-time buyers. Its rates are higher than Skipton's: 6.29% for the standard deal, or 5.99% for those buying a new-build home from one of its partner developers. April Mortgages takes a different tack with its 100% deals: you have to take out a fixed rate lasting for 10 or 15 years. These are not cheap: the 10-year fix is priced at 6.29%, while the 15-year deal is 6.53%. But an unusual feature of this mortgage is that your rate gradually falls as you pay it off. April will automatically reduce the interest rate when the customer drops into a lower 'loan-to-value' (LTV) band. The April deals are particularly suited to those who expect to make regular overpayments or plan to reduce their balance quickly, says Mendes. For example, someone expecting a pay rise or inheritance later down the line. April's maximum loan is 4.49 times income, and it does not lend on flats or new-builds. Yorkshire building society offers the £5k Deposit mortgage, which, as the name suggests, requires a minimum £5,000 deposit. You can borrow up to 99% of the price of the property. The mortgage is a five-year fixed-rate deal, now set at 5.48%. The 3 & Easy mortgage from Vida Homeloans lets you borrow 97%. You have to fix for five or seven years, and the rates are definitely at the higher end – they start at 7.14% – but these deals are designed for borrowers who may not qualify for a standard home loan. 'These 100% or near-100% LTV deals are not about chasing the cheapest rate – they're more about access,' says Mendes. 'They aim to support those who are financially stable month to month but haven't had the means to save a large deposit, whether that's due to high rent, childcare costs or lack of family help.' For those with parents or other family members willing and able to provide financial assistance, such as putting up security for the home loan, there are other no-deposit options. Lloyds Bank's Lend a Hand mortgage and Halifax's virtually identical Family Boost are available in England and Wales, and allow a first-time buyer to borrow between 95% and 100%. No deposit is required – instead, a family member has to put 10% of the purchase price into a three-year fixed-rate savings account to act as security. In both cases you have to sign up to a three-year fixed-rate mortgage, and at the time of writing, the interest rates were surprisingly competitive: 4.44% and 4.59% respectively. After three years, your family member will get back their savings with interest, as long as your mortgage repayments have all been made. Barclays has the similar Family Springboard mortgage, which is a five-year fixed-rate deal in which those borrowing 100% pay 5.29%. Other lenders offering deals of this type include Vernon building society. If you are able to pull together a 5% deposit – perhaps with help – that will give you access to a much bigger choice of deals, and more competitive interest rates. There were 462 deals that let people borrow 95% of a property's value available last month, according to the financial data provider Moneyfacts. That is more than double the number you could choose from two years ago. Nationwide is worth a look because it will let eligible first-time buyers borrow up to six times their earnings when taking out a five- or 10-year fixed rate for up to 95% of the property's value. This scheme is called Helping Hand and it means a couple with a joint income of £55,000 and a 5% deposit may be able to borrow up to £330,000 compared with the maximum £247,500 under Nationwide's standard lending. This week, one of the cheapest standard 95% deals was a 4.75% five-year fix offered by Monmouthshire building society. For those looking for a two-year fix, the cheapest deals included one from the Co-operative Bank priced at 4.83%. For many first-time buyers, a fixed-rate deal is probably the way to go because it offers the certainty of set monthly payments. However, with most experts expecting more interest rate cuts, some borrowers may be considering a base-rate tracker so they can benefit from lower payments in future. With a tracker, the rate moves down, or up, in line with the Bank of England base rate. This week, one of the lowest-cost 95% tracker mortgages was a two-year deal from Newcastle building society where you pay 5.15% (base rate plus 0.9%). However, the deal had a £1,999 product fee. Alternatively, Furness building society had a two-year discounted rate deal at 4.99% (a 3.25% discount off its standard variable rate) with no product fee. Stump up a deposit of 10%-plus and there will be even more deals you can access. Last month, there were 876 mortgages on the market that allowed people to borrow 90% of a home's value. Halifax has a scheme not dissimilar to Nationwide's called First Time Buyer Boost that lets people borrow up to 5.5 times income, provided their total income is £50,000-plus and the amount being borrowed does not exceed 90%. This week, the cheapest five-year fixes at 90% included Leek building society's deal priced at 4.38%, while the best-value two-year fixes included Furness building society's 4.45% interest rate. • All rates and product details correct at time of writing
Yahoo
5 hours ago
- Business
- Yahoo
UK mortgages: 100% loans are back – will they work for you?
Saving up for a deposit is one of the biggest challenges facing would-be homeowners, who can find that each month pretty much all most of their money is being swallowed up by rent and living costs. No-deposit deals – known as 100% mortgages – can provide a lifeline, and in recent months a new crop have come on to the market. But in return for not having to put down a deposit, you will have to pay a higher interest rate. Also the affordability rules and lending limits that apply on these loans mean they probably will not be an option for many buyers in pricier areas such as London or for some people considering a larger property. This type of mortgage is controversial, too, because homebuyers who take them out are particularly vulnerable to house price falls, as they have no equity to cushion them if there is a drop in the value of their home. Even a small fall in prices could leave some owing more on their mortgage than their home is worth. We have looked at the details of each of the no-deposit deals. We also explain how, if you can manage to save up a deposit – 5% is good, but 10% is better – this will give you access to more competitive rates and reduce your monthly outgoings. Standard home loans where the borrower does not have to put down a deposit used to be fairly common but disappeared after the 2007-08 financial crisis when lenders were concerned about the outlook for property prices. Two years ago, Skipton building society launched a 100% deal, called Track Record, aimed at people who are now renting, or were until very recently. Last month, two more lenders, April Mortgages and Gable Mortgages, launched their own no-deposit deals. It is very difficult to single out one 100% deal as 'the best' on the market, says Mark Harris, the chief executive of the mortgage broker SPF Private Clients. 'There are positives and potential drawbacks to every product. Every borrower's situation is different and therefore different outcomes will apply.' At the time of writing, Skipton's Track Record mortgage was offering the lowest interest rate. It's only available as a five-year fixed-rate loan, and you can choose from two rates – 5.29%, or 5.39% with £1,000 cashback. There is no fee. Track Record 'is ideal for renters with a proven history of paying on time', says Nicholas Mendes at the broker John Charcol. You need to show proof of having paid rent for at least 12 months in a row on a UK property (with no arrears) in the last 18 months, and have not owned a UK property in the last three years. Since its launch, Skipton has loosened its affordability rules a little so that 'in some circumstances' it will offer loans that have monthly repayments of up to 120% of the rent the customer has been paying. The maximum you can borrow is 4.49 times your annual income (for single and joint applicants), rising to 4.75 times if that income is more than £50,000. A cap of about 4.5 times income is fairly standard when UK lenders are assessing what people can afford, but it means some house-hunters in higher-priced areas will not be able to borrow enough to buy. The Skipton deal could allow a couple with a joint income of £55,000 to borrow up to £261,250. For those looking to borrow more than 4.5 times income, Gable may be able to help. Its 100% deals are potentially the ones that will allow buyers to borrow the most, says Mendes. The lender will let individual key workers borrow up to five times income. For couples who are both key workers, applicants can borrow up to 5.5 times. Gable's definition of key workers includes NHS clinicians (nurses, paramedics, doctors, etc), teachers and childcare providers, university lecturers, police officers and armed forces personnel. Gable offers two five-year fixed-rate mortgages aimed at first- and second-time buyers. Its rates are higher than Skipton's: 6.29% for the standard deal, or 5.99% for those buying a new-build home from one of its partner developers. April Mortgages takes a different tack with its 100% deals: you have to take out a fixed rate lasting for 10 or 15 years. These are not cheap: the 10-year fix is priced at 6.29%, while the 15-year deal is 6.53%. But an unusual feature of this mortgage is that your rate gradually falls as you pay it off. April will automatically reduce the interest rate when the customer drops into a lower 'loan-to-value' (LTV) band. The April deals are particularly suited to those who expect to make regular overpayments or plan to reduce their balance quickly, says Mendes. For example, someone expecting a pay rise or inheritance later down the line. April's maximum loan is 4.49 times income, and it does not lend on flats or new-builds. Yorkshire building society offers the £5k Deposit mortgage, which, as the name suggests, requires a minimum £5,000 deposit. You can borrow up to 99% of the price of the property. The mortgage is a five-year fixed-rate deal, now set at 5.48%. The 3 & Easy mortgage from Vida Homeloans lets you borrow 97%. You have to fix for five or seven years, and the rates are definitely at the higher end – they start at 7.14% – but these deals are designed for borrowers who may not qualify for a standard home loan. 'These 100% or near-100% LTV deals are not about chasing the cheapest rate – they're more about access,' says Mendes. 'They aim to support those who are financially stable month to month but haven't had the means to save a large deposit, whether that's due to high rent, childcare costs or lack of family help.' For those with parents or other family members willing and able to provide financial assistance, such as putting up security for the home loan, there are other no-deposit options. Lloyds Bank's Lend a Hand mortgage and Halifax's virtually identical Family Boost are available in England and Wales, and allow a first-time buyer to borrow between 95% and 100%. No deposit is required – instead, a family member has to put 10% of the purchase price into a three-year fixed-rate savings account to act as security. In both cases you have to sign up to a three-year fixed-rate mortgage, and at the time of writing, the interest rates were surprisingly competitive: 4.44% and 4.59% respectively. After three years, your family member will get back their savings with interest, as long as your mortgage repayments have all been made. Barclays has the similar Family Springboard mortgage, which is a five-year fixed-rate deal in which those borrowing 100% pay 5.29%. Other lenders offering deals of this type include Vernon building society. If you are able to pull together a 5% deposit – perhaps with help – that will give you access to a much bigger choice of deals, and more competitive interest rates. There were 462 deals that let people borrow 95% of a property's value available last month, according to the financial data provider Moneyfacts. That is more than double the number you could choose from two years ago. Nationwide is worth a look because it will let eligible first-time buyers borrow up to six times their earnings when taking out a five- or 10-year fixed rate for up to 95% of the property's value. This scheme is called Helping Hand and it means a couple with a joint income of £55,000 and a 5% deposit may be able to borrow up to £330,000 compared with the maximum £247,500 under Nationwide's standard lending. This week, one of the cheapest standard 95% deals was a 4.75% five-year fix offered by Monmouthshire building society. For those looking for a two-year fix, the cheapest deals included one from the Co-operative Bank priced at 4.83%. For many first-time buyers, a fixed-rate deal is probably the way to go because it offers the certainty of set monthly payments. However, with most experts expecting more interest rate cuts, some borrowers may be considering a base-rate tracker so they can benefit from lower payments in future. With a tracker, the rate moves down, or up, in line with the Bank of England base rate. This week, one of the lowest-cost 95% tracker mortgages was a two-year deal from Newcastle building society where you pay 5.15% (base rate plus 0.9%). However, the deal had a £1,999 product fee. Alternatively, Furness building society had a two-year discounted rate deal at 4.99% (a 3.25% discount off its standard variable rate) with no product fee. Stump up a deposit of 10%-plus and there will be even more deals you can access. Last month, there were 876 mortgages on the market that allowed people to borrow 90% of a home's value. Halifax has a scheme not dissimilar to Nationwide's called First Time Buyer Boost that lets people borrow up to 5.5 times income, provided their total income is £50,000-plus and the amount being borrowed does not exceed 90%. This week, the cheapest five-year fixes at 90% included Leek building society's deal priced at 4.38%, while the best-value two-year fixes included Furness building society's 4.45% interest rate. • All rates and product details correct at time of writing Sign in to access your portfolio
Yahoo
07-06-2025
- Business
- Yahoo
UK mortgages: 100% loans are back – will they work for you?
Saving up for a deposit is one of the biggest challenges facing would-be homeowners, who can find that each month pretty much all most of their money is being swallowed up by rent and living costs. No-deposit deals – known as 100% mortgages – can provide a lifeline, and in recent months a new crop have come on to the market. But in return for not having to put down a deposit, you will have to pay a higher interest rate. Also the affordability rules and lending limits that apply on these loans mean they probably will not be an option for many buyers in pricier areas such as London or for some people considering a larger property. This type of mortgage is controversial, too, because homebuyers who take them out are particularly vulnerable to house price falls, as they have no equity to cushion them if there is a drop in the value of their home. Even a small fall in prices could leave some owing more on their mortgage than their home is worth. We have looked at the details of each of the no-deposit deals. We also explain how, if you can manage to save up a deposit – 5% is good, but 10% is better – this will give you access to more competitive rates and reduce your monthly outgoings. Standard home loans where the borrower does not have to put down a deposit used to be fairly common but disappeared after the 2007-08 financial crisis when lenders were concerned about the outlook for property prices. Two years ago, Skipton building society launched a 100% deal, called Track Record, aimed at people who are now renting, or were until very recently. Last month, two more lenders, April Mortgages and Gable Mortgages, launched their own no-deposit deals. It is very difficult to single out one 100% deal as 'the best' on the market, says Mark Harris, the chief executive of the mortgage broker SPF Private Clients. 'There are positives and potential drawbacks to every product. Every borrower's situation is different and therefore different outcomes will apply.' At the time of writing, Skipton's Track Record mortgage was offering the lowest interest rate. It's only available as a five-year fixed-rate loan, and you can choose from two rates – 5.29%, or 5.39% with £1,000 cashback. There is no fee. Track Record 'is ideal for renters with a proven history of paying on time', says Nicholas Mendes at the broker John Charcol. You need to show proof of having paid rent for at least 12 months in a row on a UK property (with no arrears) in the last 18 months, and have not owned a UK property in the last three years. Since its launch, Skipton has loosened its affordability rules a little so that 'in some circumstances' it will offer loans that have monthly repayments of up to 120% of the rent the customer has been paying. The maximum you can borrow is 4.49 times your annual income (for single and joint applicants), rising to 4.75 times if that income is more than £50,000. A cap of about 4.5 times income is fairly standard when UK lenders are assessing what people can afford, but it means some house-hunters in higher-priced areas will not be able to borrow enough to buy. The Skipton deal could allow a couple with a joint income of £55,000 to borrow up to £261,250. For those looking to borrow more than 4.5 times income, Gable may be able to help. Its 100% deals are potentially the ones that will allow buyers to borrow the most, says Mendes. The lender will let individual key workers borrow up to five times income. For couples who are both key workers, applicants can borrow up to 5.5 times. Gable's definition of key workers includes NHS clinicians (nurses, paramedics, doctors, etc), teachers and childcare providers, university lecturers, police officers and armed forces personnel. Gable offers two five-year fixed-rate mortgages aimed at first- and second-time buyers. Its rates are higher than Skipton's: 6.29% for the standard deal, or 5.99% for those buying a new-build home from one of its partner developers. April Mortgages takes a different tack with its 100% deals: you have to take out a fixed rate lasting for 10 or 15 years. These are not cheap: the 10-year fix is priced at 6.29%, while the 15-year deal is 6.53%. But an unusual feature of this mortgage is that your rate gradually falls as you pay it off. April will automatically reduce the interest rate when the customer drops into a lower 'loan-to-value' (LTV) band. The April deals are particularly suited to those who expect to make regular overpayments or plan to reduce their balance quickly, says Mendes. For example, someone expecting a pay rise or inheritance later down the line. April's maximum loan is 4.49 times income, and it does not lend on flats or new-builds. Yorkshire building society offers the £5k Deposit mortgage, which, as the name suggests, requires a minimum £5,000 deposit. You can borrow up to 99% of the price of the property. The mortgage is a five-year fixed-rate deal, now set at 5.48%. The 3 & Easy mortgage from Vida Homeloans lets you borrow 97%. You have to fix for five or seven years, and the rates are definitely at the higher end – they start at 7.14% – but these deals are designed for borrowers who may not qualify for a standard home loan. 'These 100% or near-100% LTV deals are not about chasing the cheapest rate – they're more about access,' says Mendes. 'They aim to support those who are financially stable month to month but haven't had the means to save a large deposit, whether that's due to high rent, childcare costs or lack of family help.' For those with parents or other family members willing and able to provide financial assistance, such as putting up security for the home loan, there are other no-deposit options. Lloyds Bank's Lend a Hand mortgage and Halifax's virtually identical Family Boost are available in England and Wales, and allow a first-time buyer to borrow between 95% and 100%. No deposit is required – instead, a family member has to put 10% of the purchase price into a three-year fixed-rate savings account to act as security. In both cases you have to sign up to a three-year fixed-rate mortgage, and at the time of writing, the interest rates were surprisingly competitive: 4.44% and 4.59% respectively. After three years, your family member will get back their savings with interest, as long as your mortgage repayments have all been made. Barclays has the similar Family Springboard mortgage, which is a five-year fixed-rate deal in which those borrowing 100% pay 5.29%. Other lenders offering deals of this type include Vernon building society. If you are able to pull together a 5% deposit – perhaps with help – that will give you access to a much bigger choice of deals, and more competitive interest rates. There were 462 deals that let people borrow 95% of a property's value available last month, according to the financial data provider Moneyfacts. That is more than double the number you could choose from two years ago. Nationwide is worth a look because it will let eligible first-time buyers borrow up to six times their earnings when taking out a five- or 10-year fixed rate for up to 95% of the property's value. This scheme is called Helping Hand and it means a couple with a joint income of £55,000 and a 5% deposit may be able to borrow up to £330,000 compared with the maximum £247,500 under Nationwide's standard lending. This week, one of the cheapest standard 95% deals was a 4.75% five-year fix offered by Monmouthshire building society. For those looking for a two-year fix, the cheapest deals included one from the Co-operative Bank priced at 4.83%. For many first-time buyers, a fixed-rate deal is probably the way to go because it offers the certainty of set monthly payments. However, with most experts expecting more interest rate cuts, some borrowers may be considering a base-rate tracker so they can benefit from lower payments in future. With a tracker, the rate moves down, or up, in line with the Bank of England base rate. This week, one of the lowest-cost 95% tracker mortgages was a two-year deal from Newcastle building society where you pay 5.15% (base rate plus 0.9%). However, the deal had a £1,999 product fee. Alternatively, Furness building society had a two-year discounted rate deal at 4.99% (a 3.25% discount off its standard variable rate) with no product fee. Stump up a deposit of 10%-plus and there will be even more deals you can access. Last month, there were 876 mortgages on the market that allowed people to borrow 90% of a home's value. Halifax has a scheme not dissimilar to Nationwide's called First Time Buyer Boost that lets people borrow up to 5.5 times income, provided their total income is £50,000-plus and the amount being borrowed does not exceed 90%. This week, the cheapest five-year fixes at 90% included Leek building society's deal priced at 4.38%, while the best-value two-year fixes included Furness building society's 4.45% interest rate. • All rates and product details correct at time of writing Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Guardian
07-06-2025
- Business
- The Guardian
UK mortgages: 100% loans are back – will they work for you?
Saving up for a deposit is one of the biggest challenges facing would-be homeowners, who can find that each month pretty much all most of their money is being swallowed up by rent and living costs. No-deposit deals – known as 100% mortgages – can provide a lifeline, and in recent months a new crop have come on to the market. But in return for not having to put down a deposit, you will have to pay a higher interest rate. Also the affordability rules and lending limits that apply on these loans mean they probably will not be an option for many buyers in pricier areas such as London or for some people considering a larger property. This type of mortgage is controversial, too, because homebuyers who take them out are particularly vulnerable to house price falls, as they have no equity to cushion them if there is a drop in the value of their home. Even a small fall in prices could leave some owing more on their mortgage than their home is worth. We have looked at the details of each of the no-deposit deals. We also explain how, if you can manage to save up a deposit – 5% is good, but 10% is better – this will give you access to more competitive rates and reduce your monthly outgoings. Standard home loans where the borrower does not have to put down a deposit used to be fairly common but disappeared after the 2007-08 financial crisis when lenders were concerned about the outlook for property prices. Two years ago, Skipton building society launched a 100% deal, called Track Record, aimed at people who are now renting, or were until very recently. Last month, two more lenders, April Mortgages and Gable Mortgages, launched their own no-deposit deals. It is very difficult to single out one 100% deal as 'the best' on the market, says Mark Harris, the chief executive of the mortgage broker SPF Private Clients. 'There are positives and potential drawbacks to every product. Every borrower's situation is different and therefore different outcomes will apply.' At the time of writing, Skipton's Track Record mortgage was offering the lowest interest rate. It's only available as a five-year fixed-rate loan, and you can choose from two rates – 5.29%, or 5.39% with £1,000 cashback. There is no fee. Track Record 'is ideal for renters with a proven history of paying on time', says Nicholas Mendes at the broker John Charcol. You need to show proof of having paid rent for at least 12 months in a row on a UK property (with no arrears) in the last 18 months, and have not owned a UK property in the last three years. Since its launch, Skipton has loosened its affordability rules a little so that 'in some circumstances' it will offer loans that have monthly repayments of up to 120% of the rent the customer has been paying. The maximum you can borrow is 4.49 times your annual income (for single and joint applicants), rising to 4.75 times if that income is more than £50,000. A cap of about 4.5 times income is fairly standard when UK lenders are assessing what people can afford, but it means some house-hunters in higher-priced areas will not be able to borrow enough to buy. The Skipton deal could allow a couple with a joint income of £55,000 to borrow up to £261,250. For those looking to borrow more than 4.5 times income, Gable may be able to help. Its 100% deals are potentially the ones that will allow buyers to borrow the most, says Mendes. The lender will let individual key workers borrow up to five times income. For couples who are both key workers, applicants can borrow up to 5.5 times. Gable's definition of key workers includes NHS clinicians (nurses, paramedics, doctors, etc), teachers and childcare providers, university lecturers, police officers and armed forces personnel. Gable offers two five-year fixed-rate mortgages aimed at first- and second-time buyers. Its rates are higher than Skipton's: 6.29% for the standard deal, or 5.99% for those buying a new-build home from one of its partner developers. April Mortgages takes a different tack with its 100% deals: you have to take out a fixed rate lasting for 10 or 15 years. These are not cheap: the 10-year fix is priced at 6.29%, while the 15-year deal is 6.53%. But an unusual feature of this mortgage is that your rate gradually falls as you pay it off. April will automatically reduce the interest rate when the customer drops into a lower 'loan-to-value' (LTV) band. The April deals are particularly suited to those who expect to make regular overpayments or plan to reduce their balance quickly, says Mendes. For example, someone expecting a pay rise or inheritance later down the line. April's maximum loan is 4.49 times income, and it does not lend on flats or new-builds. Yorkshire building society offers the £5k Deposit mortgage, which, as the name suggests, requires a minimum £5,000 deposit. You can borrow up to 99% of the price of the property. The mortgage is a five-year fixed-rate deal, now set at 5.48%. The 3 & Easy mortgage from Vida Homeloans lets you borrow 97%. You have to fix for five or seven years, and the rates are definitely at the higher end – they start at 7.14% – but these deals are designed for borrowers who may not qualify for a standard home loan. 'These 100% or near-100% LTV deals are not about chasing the cheapest rate – they're more about access,' says Mendes. 'They aim to support those who are financially stable month to month but haven't had the means to save a large deposit, whether that's due to high rent, childcare costs or lack of family help.' For those with parents or other family members willing and able to provide financial assistance, such as putting up security for the home loan, there are other no-deposit options. Lloyds Bank's Lend a Hand mortgage and Halifax's virtually identical Family Boost are available in England and Wales, and allow a first-time buyer to borrow between 95% and 100%. No deposit is required – instead, a family member has to put 10% of the purchase price into a three-year fixed-rate savings account to act as security. In both cases you have to sign up to a three-year fixed-rate mortgage, and at the time of writing, the interest rates were surprisingly competitive: 4.44% and 4.59% respectively. After three years, your family member will get back their savings with interest, as long as your mortgage repayments have all been made. Barclays has the similar Family Springboard mortgage, which is a five-year fixed-rate deal in which those borrowing 100% pay 5.29%. Other lenders offering deals of this type include Vernon building society. If you are able to pull together a 5% deposit – perhaps with help – that will give you access to a much bigger choice of deals, and more competitive interest rates. There were 462 deals that let people borrow 95% of a property's value available last month, according to the financial data provider Moneyfacts. That is more than double the number you could choose from two years ago. Nationwide is worth a look because it will let eligible first-time buyers borrow up to six times their earnings when taking out a five- or 10-year fixed rate for up to 95% of the property's value. This scheme is called Helping Hand and it means a couple with a joint income of £55,000 and a 5% deposit may be able to borrow up to £330,000 compared with the maximum £247,500 under Nationwide's standard lending. This week, one of the cheapest standard 95% deals was a 4.75% five-year fix offered by Monmouthshire building society. For those looking for a two-year fix, the cheapest deals included one from the Co-operative Bank priced at 4.83%. For many first-time buyers, a fixed-rate deal is probably the way to go because it offers the certainty of set monthly payments. However, with most experts expecting more interest rate cuts, some borrowers may be considering a base-rate tracker so they can benefit from lower payments in future. With a tracker, the rate moves down, or up, in line with the Bank of England base rate. This week, one of the lowest-cost 95% tracker mortgages was a two-year deal from Newcastle building society where you pay 5.15% (base rate plus 0.9%). However, the deal had a £1,999 product fee. Alternatively, Furness building society had a two-year discounted rate deal at 4.99% (a 3.25% discount off its standard variable rate) with no product fee. Stump up a deposit of 10%-plus and there will be even more deals you can access. Last month, there were 876 mortgages on the market that allowed people to borrow 90% of a home's value. Halifax has a scheme not dissimilar to Nationwide's called First Time Buyer Boost that lets people borrow up to 5.5 times income, provided their total income is £50,000-plus and the amount being borrowed does not exceed 90%. This week, the cheapest five-year fixes at 90% included Leek building society's deal priced at 4.38%, while the best-value two-year fixes included Furness building society's 4.45% interest rate. All rates and product details correct at time of writing
The Independent
26-03-2025
- Business
- The Independent
How do no-deposit mortgages work and should I get one?
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. No deposit mortgages are back on the market, making it cheaper for first-time buyers to get on the property ladder. At the time of writing there are currently 16 different residential mortgage options at 100 per cent loan-to-value (LTV), with some requiring a family member or friend to provide security if they fall behind on payments. Of course, there are far more options if you are able to save even a small deposit. Eligibility criteria varies and lenders are more strict compared with the 2008 financial crises where high LTV home loans were more common. You will still need to pass tough affordability tests to prove you can afford the repayments. But these mortgages typically cost more than other products and there are risks to be aware of, particularly if house prices fall. Rachel Springall, finance expert at said: 'First-time buyers are the lifeblood of the mortgage market, but it is an excruciating situation for them to secure a mortgage amid a short supply of affordable housing. 'There will be many reliant on the 'Bank of Mum and Dad' to help them get their foot onto the property ladder, such as with a guarantor mortgage. There are even options for borrowers to add their family or friends onto their mortgage to borrow more, but these pose a risk to anyone on the application should the homeowner default on their mortgage.' Here is what you need to know. What is a no deposit mortgage? As the name suggests, a no deposit or 100 per cent LTV mortgage gives borrowers access to a home loan without having to put any money down. You will still need to go through a mortgage application though to prove that you can afford the monthly repayments and there will also be interest rates stress tests to assess whether you can still repay if interest rates rise. Mark Eaton, chief operating officer for April Mortgages, said: 'A 100 per cent mortgage can be a game-changer for first-time buyers struggling to save while renting. 'By removing the need for a deposit, it eliminates one of the biggest barriers to homeownership, allowing buyers to step onto the property ladder much sooner. 'This is particularly beneficial for renters whose monthly payments are already comparable to mortgage costs but who find it difficult to save a lump sum alongside their living expenses.' Who offers no deposit mortgages? Most 100 per cent LTV mortgages require someone else to provide a security such as savings or committing to make repayments if the borrower defaults. Skipton Building Society is often hailed as the most innovative. It launched the Track Record mortgage in 2023 that provides a 100 per cent LTV loan as long as applicants can show they have made rental payments on time over a 12-month period. The product is only available to first-time buyers over the age of 21 with a good credit history and no guarantor is required. The maximum that renters can borrow will depend on their credit score, evidence of making their rent on time for the last 12 months and their income but there is a limit of £600,000. Elliot Culley, director at Switch Mortgage Finance, said: 'Affordability for this mortgage is calculated in two ways - the borrower's income but also the interest rate and rent the borrower has been paying as a tenant. 'I have found the rental payments and current higher interest rates for this product can hamper the amount the borrower can lend which means a smaller property than the borrower is sometimes currently renting. So the product has some limitations currently whilst rates are higher, if rates continue to fall it's likely this product would become more popular as the borrowing capacity should also increase.' Other options include Barclays Bank's Mortgage Boost, where first-time buyers and existing homeowners can add another individual to an application to increase the amount they can borrow. Anyone on the application is legally responsible for the mortgage but the helper won't own the property or be named on the title deeds. Barclays Bank also offers a guarantor 'Family Springboard Mortgage' whereby helpers can deposit a lump sum - 10 percent of the amount borrowed - for five years to help a first-time buyer to secure a mortgage. The money is returned to the depositor with interest. Lloyds Bank has a Lend a Hand Mortgage that lets a guarantor deposit 10 per cent of the amount borrowed for three years into a fixed term savings account to help a borrower secure a mortgage, which is returned to the depositor with interest. However, this has a limited distribution. Similarly, Halifax has a Family Boost Mortgage that works the same way but the borrower or helper must have a Reward or Ultimate Reward Current Account with the bank. What are the risks of a zero deposit mortgage? A 100 per cent LTV mortgage may remove one the largest pitfalls of buying a home - the deposit - but there are downsides. The rates are typically higher than if you can even put down a 5 per cent deposit. For example, Skipton's Track Record mortgage has a rate of 5.44 per cent for five years. But if you can pull together a 5 per cent deposit, Lloyds Bank has a five-year fix at 4.96 per cent. A 25-year £200,000 mortgage would cost £1,221 per month with Skipton in this scenario but would be £1,164 with Lloyds Bank. That is £57 cheaper per month, £684 over the year and would save you £3,420 over the full five years. Steve Humphrey, founder of The Mortgage Pod, said: 'My advice is often to wait until they have a five per cent or higher deposit, as this would open up substantially more options and lenders.' Another risk is that if house prices fall, you could end up in negative equity - which is when the value of your house is lower than that of your mortgage. This could make it hard to remortgage or sell as you would need spare cash to make up any shortfall between your property value and the amount of loan left. Springall added: 'House prices can rise in the years ahead, but they can also plummet. The latter could be a disaster for borrowers with little equity in their homes from borrowing at the highest ends of the loan-to-value spectrum.' When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
