A lesser-known lender has introduced a new mortgage option allowing home buyers to purchase a property without needing a deposit. The deal, launched by April Mortgages, is a rare 100 per cent mortgage product on the market.
April Mortgages is already known for offering mortgages of up to seven times a borrower’s income in certain cases. However, with this no-deposit option, the borrowing cap is more conservative—set at 4.49 times the applicant’s annual income.
To illustrate, someone earning £40,000 a year could potentially buy a property worth up to £179,600, even without any savings for a deposit. Despite this, buyers still need to be able to afford the monthly repayments, which will be higher than if they had contributed a deposit upfront.
It’s also important to note that some additional costs remain unavoidable. Buyers will need money to cover legal fees, a property survey, and possibly stamp duty, depending on the price of the home.
Applicants must also earn a minimum of £24,000 per year to be eligible for the 100 per cent mortgage. Another key condition is the length of the fixed term—borrowers must commit to either a 10-year or 15-year fixed-rate deal, which is far longer than the more common two or five-year mortgage terms.
What is the interest rate on a 100% mortgage?
A lesser-known lender has introduced a new mortgage option allowing home buyers to purchase a property without needing a deposit. The deal, launched by April Mortgages, is a rare 100 per cent mortgage product on the market.
April Mortgages is already known for offering mortgages of up to seven times a borrower’s income in certain cases. However, with this no-deposit option, the borrowing cap is more conservative—set at 4.49 times the applicant’s annual income.
To illustrate, someone earning £40,000 a year could potentially buy a property worth up to £179,600, even without any savings for a deposit. Despite this, buyers still need to be able to afford the monthly repayments, which will be higher than if they had contributed a deposit upfront.
It’s also important to note that some additional costs remain unavoidable. Buyers will need money to cover legal fees, a property survey, and possibly stamp duty, depending on the price of the home.
Applicants must also earn a minimum of £24,000 per year to be eligible for the 100 per cent mortgage. Another key condition is the length of the fixed term—borrowers must commit to either a 10-year or 15-year fixed-rate deal, which is far longer than the more common two or five-year mortgage terms.
James Pagan, who serves as director of product at April Mortgages, explained that their new no-deposit mortgage was created for financially responsible buyers who can afford monthly repayments but don’t have access to a deposit. This is particularly aimed at those who aren’t receiving financial assistance from family members.
He highlighted that saving for a deposit continues to be one of the biggest hurdles for would-be homeowners, even those with good incomes and solid credit histories. Pagan believes the solution isn’t to lower lending standards, but to develop mortgage products that are more in tune with the realities of today’s property market.
April’s new mortgage product combines full credit and affordability assessments with the stability of a fixed interest rate, locked in for either 10 or 15 years. According to Pagan, this makes it a responsible choice for buyers with a proven track record of managing their finances who are otherwise being held back by traditional deposit requirements.
That said, potential borrowers should carefully consider whether this type of mortgage is right for them. In some cases, it may be wiser to wait and save for even a modest deposit, which could result in lower monthly payments and more long-term financial security.
David Hollingworth, associate director at L&C Mortgages, pointed out that borrowers must be able to demonstrate they can manage their mortgage repayments. This is a crucial requirement for accessing any no-deposit lending option.
He also advised potential homeowners to be cautious about the risk of falling into negative equity if house prices decline. Negative equity becomes a real concern if someone needs to sell their property, as it would mean selling for less than the mortgage amount owed. However, having a fixed interest rate can offer some protection from changes in the market, helping buyers to weather short-term price dips.
Despite these assurances, not everyone in the mortgage industry is entirely comfortable with zero-deposit deals. Some experts are reminded of the relaxed lending standards that contributed to financial instability during the last housing market crash.
Emma Jones, managing director at the specialist mortgage broker When The Bank Says No, voiced concerns to the press outlet Newspage. She suggested that now might be a good time to pause and reflect on the direction the mortgage market is heading.
Jones warned that lenders are starting to loosen their criteria, and Government support for increased lending could bring risks. For those who remember the 2008 global financial crisis, there’s a growing sense of déjà vu, raising the question of whether history could soon repeat itself.
What are the alternatives?
There are currently a few other mortgage options available that require little or no deposit. However, most of these deals involve conditions such as having a guarantor, providing collateral—often from a family member’s property—or offering a cash deposit that the lender holds for a set period.
One example is Halifax’s Family Boost mortgage, which allows a family member to place 10% of the property’s value into a fixed savings account for three years. In return, the borrower can access a mortgage with no deposit required. Provided repayments are made on time, the savings are returned with interest at the end of the term. The first-time buyer remains the sole owner of the property, and only their name appears on the mortgage.
Accord Mortgages, which is part of Yorkshire Building Society, offers another low-deposit option. Their deal covers up to 99% of the property’s value, with buyers needing to provide a minimum deposit of £5,000. This offer is available on homes worth up to £500,000, which means the deposit could be as low as 1% of the purchase price. However, it only applies to houses—excluding flats and new builds—and at least one applicant must be a first-time buyer.
What makes the new 100% mortgage from April Mortgages different is that it doesn’t require any help from family members. This independent approach may appeal to buyers who don’t have access to the “Bank of Mum and Dad”.
Mortgage brokers suggest that April’s move could prompt other lenders to roll out similar products. Some even believe we could see a return of mortgages exceeding the purchase price, as was common before the financial crisis. These loans were often marketed to help buyers cover additional costs, such as furnishing their new homes or buying appliances.
Riz Malik, Director at R3 Wealth, shared his view: “We’re likely to see more lenders entering the 100% loan-to-value market as the housing sector continues to show strength. Lenders are keen to offer new deals and may revisit older strategies to do so. It almost feels like a return to the early 2000s. Could we even see a lender offering over 100% again before the year ends?”
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