April Mortgages has launched a 100% loan-to-value product, allowing first-time buyers and movers to purchase a property without putting down a deposit — one of the first such offerings since the financial crisis of 2008.
The Dutch-owned lender, which entered the UK market last year but has failed to make a significant impression thus far — is making the product available from today. Designed for borrowers unable to save for a deposit — including those without family assistance — the ‘No Deposit Mortgage’ is available on fixed terms of either 10 or 15 years, with initial rates starting from 5.99%.
REQUIREMENTS
Applicants must have a minimum household income of £24,000, with up to two individuals aged under 70 permitted on the mortgage. Loans will be capped at 4.49 times income, with lending available between £50,000 and £600,000. Property values must fall between £75,000 and £2m nationwide, rising to £2.5m for homes in Greater London.
The mortgage is available on houses only, excluding flats, and is aimed primarily at renters who are financially stable but unable to accumulate a deposit in the current high-cost environment.
In a departure from conventional mortgage pricing structures, the product offers a reduction in interest rates as borrowers repay capital and move into lower LTV brackets. April Mortgages has also included flexibility measures: borrowers will be able to make unlimited overpayments and repay in full without early repayment charges (ERCs), provided the repayment comes from their own funds or coincides with a house move.
However, standard ERCs apply for those remortgaging to another lender. These start at 9% for the first two years of the 10-year product, tapering down over time, and for six years on the 15-year fix.
Fees include a £195 application charge and a £999 completion fee, with a free valuation offered for properties worth up to £1m.
April Mortgages said the unusually long fixed-rate terms would provide security for borrowers in a volatile interest rate environment, while also reducing the risk of negative equity. The product has been structured to help insulate buyers from house price fluctuations and give them confidence in long-term affordability, the lender said.
