A Deposito-Free mortgage with which first buyers and movers can borrow 100% of the value of their property has been launched by April mortgages.
The deals can be held as fixed rates of 10 or 15 years that start at 5.99% and automatically fall as the loan is paid off. It means over the years that reimbursements gradually decrease.
There are also no early repayment costs (ERCs), which means that borrowers will not receive any fines if they move or pay the loan before the deal ends.
Borrowers can also make unlimited payments.
In exchange, the April mortgages require that borrowers have a steadily income of at least £ 24,000 and a clean credit history.
The product has been welcomed by brokers, despite the fact that there is often a lot of skepticism around 100% mortgages.
Since the financial crisis in 2008, no deposit mortgages have been considered very risky, because there is more chance that borrowers will fall into negative equity.
As such, there are few products on the market. Those who offer 100% loans usually need a guarantee.
With the April product, however, the minimum period of 10 years here is the key, because locking for this duration reduces the risks of negative equity.
There are also other guarantees in place. Borrowing is covered at £ 600,000 and applicants may only borrow their income 4.49 times.
Rachael Hunnisett, director of mortgage distribution at April Mortgages, said: “The housing market is dramatically shifted. The wage growthity to compete with rising house prices is more difficult to reach a house – even for people with a steady income.
“But having a place to name your own, still brings safety, stability and freedom to build a life – and that should not feel out of reach.
“In April we were dedicated to make mortgages easier, more flexible and better suited for the way people live today.”