19-05-2025
Another lender launches 100% mortgages for first-time buyers
A new mortgage has been launched offering the chance to borrow 100 per cent of a property's value - the second such deal in less than a week.
Little-known lender Gable Mortgages, which was founded in 2024, is providing home loans which don't require the borrower to put down any deposit.
It follows April Mortgages ' launch of a similar 100 per cent product last week.
No-deposit mortgages have been extremely rare in recent years, with most lenders requiring the borrower to put down at least 5 per cent.
Those that do offer deposits lower than that often require a parent to act as a guarantor.
According to Gable's website, its products are aimed at 'generation rent' who can manage to pay their rent - which may be higher than a mortgage on a similar property - but struggle to save a deposit.
Justin Le Roux, chief executive of Gable Group, said: 'There is a whole generation of renters out there who are struggling to save to buy and pay their rent at the same time.
'This has made it significantly harder for first time buyers, especially key workers get onto the property ladder.
'We believe in changing this by offering a solution where the buyer can get a quick decision based on affordability and not – like so many other products on the market – based on what they have managed to save up or borrow from the bank of mum and dad.'
The lender has two products available -a standard mortgage, and one that is specific to new-build buyers purchasing a home from a list of 'partner' developers.
Comparably to many other lenders, Gable's standard mortgage allows borrowing of 4.49 times the buyer's salary. This rises to 5.5 per cent for key workers in certain professions.
It means someone earning £40,000 a year could hypothetically buy a home worth £179,600 without any savings - and if they were a key worker, that could rise to £220,000.
Gable borrowers need to be aged at least 23 and want to borrow a minimum of £125,000. They must also go through a mortgage broker.
Both of the mortgages are offered on a five-year fixed term only. This is different to April Mortgages, where borrowers must fix for 10 or 15 years.
The rate on the standard mortgage is 5.95 per cent, and on the new-build mortgage is 5.65 per cent.
This is substantially more expensive than the mortgages available for those who could save a 5 per cent deposit.
For example, Monmouthshire Building Society has a five-year fix at 4.75 per cent with a £1,409 fee, while Nationwide offers one at 4.79 per cent with a £1,167 fee.
Someone borrowing a £200,000 mortgage over 30 years would pay £1,043 every month on the Monmouthshire 5 per cent deposit mortgage, compared to £1,193 on the standard Gable 0 per cent deposit mortgage.
On April's rival 100 per cent mortgage, the interest rate initially starts at 5.99 per cent, but this can be reduced over time as the debt is repaid.
Gable borrowers will need to look out for the fees, which are considerably higher than those charged on with-deposit mortgages with other lenders.
On the standard mortgage, they are tiered depending on the value of the property and range from £2,095 on a property worth between £125,000 and £200,000, to £4,995 on a home worth £400,000 to £500,000 and £9,995 on a home worth between £800,000 and £1million.
On the new-build mortgage, though, the fees are paid by the developer.
With most mortgage lenders, the arrangement fee is the same no matter what the property price, and usually ranges from nothing to about £2,000.
Borrowers will also want to look at the legal fees on Gable's mortgages.
If they choose to use Gable's partner solicitor, they will pay between £2,395 and £2,995 in total, including their own conveyancing and Gable's legal costs.
It is standard in the industry for mortgage applicants to pay the lender's legal costs, although some offer 'fee-free legals' deals.
However, if a Gable borrower chooses to use their own solicitor, they will need to pay £1,495 to cover Gable's legal fees, as well as their own conveyancing solicitor's fees on top.
According to Compare My Move's Cost of Moving House Index, the average conveyancing fee in 2024 was £1,567.
Are 100% mortgages a good idea?
While no-deposit mortgages will help more people get on the property ladder, reactions to them in the property industry are often mixed.
Some say that a person's long-term earnings and their ability to pay the mortgage each month are more important than their ability to save a one-off deposit.
However, others raise concerns about negative equity, which is when house prices fall and the value of a home falls below that of the mortgage secured on it and makes it harder to remortgage or sell.
They also recall the struggles faced by some buyers with 100 per cent mortgages during the financial crisis.
Kylie-Ann Martin, mortgage broker at Selby-based KAG Financial, told the news agency Newspage: 'I truly believe there is a place for 100 per cent mortgages, if they are regulated in the right way.
'We speak to many people paying huge amounts of rent that would see a considerable reduction in costs when comparing this to a mortgage - so for some I think it is fantastic that more lenders are offering them an opportunity to become homeowners.'
While Kundan Bhaduri of portfolio landlord and property developer The Kushman Group said: 'Gable and April Mortgages' zero-deposit products bear striking resemblance to Northern Rock's pre-2007 folly that culminated in Britain's first bank run since 1866 and left millions in negative equity.
'The UK property market already suffers from endemic structural issues.
'Injecting more unqualified buyers will further inflate prices whilst creating a new cohort of vulnerable homeowners.'
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.
