Boost for first-time patrons as new 0% deposit mortgage launched – is it a great way to get onto the property ladder?
First-time buyers have been given a boost to take the first step on the property ladder as another lender launches a zero-deposit mortgage.
Leicestershire-based Melton Building Society has revealed those buying a starter home can now secure a mortgage with the mutual even if they have little or no deposit.
The deal is a five-year fix at 5.99 per cent with a £199 application fee, and £199 cashback upon completion.
It means young buyers who have struggled to save spare cash into a house deposit pot could get on to the first rung of the property ladder.
Simon Taylor, chief executive of the mutual, says: ‘It’s well documented that in recent times taking the first step into home ownership has become increasingly difficult for buyers.
‘As a modern mutual building society, it’s important that we look for ways to innovate and offer solutions to overcome the barriers that exist to home ownership.’
Young buyers pleagued by astretched affordbaility now have attractive deals to choose from
First-time buyers have been plagued with soaring house prices – which have recently hit £300,000, according to Halifax – that make it increasingly harder to build a 10 per cent deposit.
Combined with sky-high mortgage rates, young buyers are increasingly feeling like getting onto the property ladder is an untenable dream.
But now the tide is starting to turn for those buying a starter home as a number of affordable and attractive deals have entered the market, and mortgage rates begin to drop.
The zero-deposit offering from Melton BS was trialled across the East Midlands for the past few weeks but the scale of demand from customers proved the deal was worth widening to buyers across England and Wales.
The product is yet another bumper deal in the arsenal of first-time buyers after Santander launched a 98 per cent mortgage a few weeks ago for buyers with at least a £10,000 deposit.
Kylie-Ann Martin, of broker KAG Financial, says: ‘2026 is lining up to be the year of the first-time buyer – and rightly so.
‘After a few years of wobbly rates, rising rents and a lack of low deposit options, lenders have listened to the marketplace and that combined with a rate war is a great thing for buyers.
‘Having been in the industry 17 years, I can’t remember a time when so many different options were available for those with smaller deposits, even for those without the perfect squeaky clean credit rating.’
She says that droves of buyers are now returning to the market as sticky rates begin to tumble and more attractive deals are on the market.
Brokers are hoping the zero-deposit deal will boost the market after a period of stagnation.
Stretched affordability and uncertainty over housing policy ahead of the Autumn Budget brought the market to all but a standstill.
But now Simon Birdgland, of Charwin Private Clients, says the spring market – which is typically lively – should hopefully spark into life.
He said: ‘There have been a number of fat carrots dangled in front of the borrowing public in the last few days. Hopefully enough to tease the spring market into action.’
And unlike some other zero-deposit mortgages, Melton BS is not requiring buyers to have a guarantor or secure the loan against a family member’s property. They also don’t require proof that buyers have made rental payments.
The deal won’t be suitable for everyone, though.
Monthly payments for mortgages without a deposit are likely to be higher than those where tens of thousands of pounds of the purchase price have already been paid.
If buyers do have thousands of pounds saved up for a mortgage then using this as a deposit could educe monthly payments and mean they can secure a lower fixed rate – unlike the high 5.99 per cent on offer here.
