It’s not exactly news that first-time buyers in the UK are struggling. They are faced with rocketing property prices, lack of small starter homes/affordable housing schemes, high rents which prevent them from saving for a deposit, rising interest payments, finding the right mortgage that works for them and of course fierce competition amongst buyers. But, thanks to a new lender – April Mortgages and their Dutch-style mortgages – things might be about to change for the better.
What is a Dutch-Style Mortgage?
A Dutch-style mortgage is a longer term fixed rate mortgage where the interest rate automatically reduces as the borrowers repay their home loan. Thought of as a fairer way to treat customers, April Mortgages are currently offering these types of loans to existing homeowners who are remortgaging, but aims to offer them out to new buyers by the end of March/early April.
Who are April Mortgages?
April Mortgages is a UK subsidiary of the Dutch asset manager DMFCO, which has made more than 100,000 loans totalling almost €30bn (£25.6bn) in the Netherlands since 2014 through its mortgage lending arm, Munt. It is authorised by the Financial Conduct Authority and plans to offer fixed-rate deals of five, seven, ten, twelve and fifteen years, with rates starting at 4.99%. While April will only lend at up to 85% loan-to-value to begin with, the firm plans to offer mortgages to those with a 5% deposit next month as it targets first-time buyers.
How does it work?
With April, first-time buyers will be able to fix their mortgage rate for the longer term, so they know exactly how much they will need to pay each month. And whilst some lenders might charge extra for this peace of mind, or lock buyers into their mortgage with expensive penalties, April will do the opposite.
Furthermore, they plan to offer longer term fixed rate mortgages without Early Repayment Charges if you move home or repay your mortgage in full. They will also lower the rate on your mortgage as you pay it off and reducing your debt. Effectively it’s a fixed rate, where the rate actually falls. Plus if the property has increased in value, April will automatically switch buyers into a lower loan-to-value band and probably a lower rate and all without the need to remortgage.
Reduced interest rate as mortgage it paid off
Helen Checketts, Head of Residential Property at Alsters Kelley said. “Having a fixed rate mortgage where the rate actually falls is certainly revolutionary. As far as we are aware, April is the only lender in the UK offering this type of mortgage and we think that take up amongst first-time buyers will be high. After all, who wouldn’t want to reduce their interest rates as you pay off your mortgage?”
Helen continues. “Our understanding is that April’s mortgage deals will only be available via brokers, but if you want to find out more about the Bank, we suggest that you visit their website initially or talk to a mortgage broker and of course keep your eyes peeled for the roll out of their first-time buyer deals over the coming months.”
Next steps
If you are looking to buy your first home or looking to move house then please get in touch and speak with anyone in the Residential Property team who will be happy to help.
And thanks to our network of offices covering Coventry, Leamington, Nuneaton, Stratford-upon-Avon and Southam, we are very accessible too. For timely and quality advice, please contact Helen Checketts, Head of Property at Alsters Kelley on 01926 356 000 or email helen.checketts@alsterskelley.com.
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Helen Checketts
Helen’s role is to assist individuals with a wide variety of property transactions.
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helen.checketts@alsterskelley.com