New mortgage deal requiring £0 deposit launches in UK today

It is the first of its kind since the 2008 recession.

This type of deposit-free mortgage used to be quite common up until the 2008 recession; however, it has now returned to the UK, backed by a Dutch firm that has promised to fix its rates for ten years.

The rates for these mortgages start at 5.99% and are set to last for 10 to 15 years.

With most mortgages, buyers need to put down a deposit of around five to 20%; however with this one the lenders are able to finance all of it.

April Mortgages, a UK-based subsidiary of the Dutch asset manager DMFCO, has said that there are no restrictions on who can apply for a mortgage, only a household income of at least £24,000 is needed.

Things such as collateral or showing a history of previous rent paid are not required.

Nick Mendes of mortgage brokers John Charcoal is all for the new mortgage programme.

He said it "offers a much-needed alternative for financially responsible renters who have consistently managed their payments but have been locked out of the housing market."

However, there are some nay-sayers, whose concerns are that those buying via this scheme will become "trapped".

James Daley from Fairer Finance said: "I understand people are impatient to get on the property ladder and rising prices have kept it out of reach for many.

"But I am not convinced that the answer is to lend even more money to people and to waive the need for a deposit.

"People who have no equity have fewer choices and are much more vulnerable to falling into negative equity and finding themselves trapped."

Daley believes that more houses need to be built and that lending people "more and more money just builds more risk into our economy."

He added: "It feels like we are already forgetting the lessons from the financial crisis."